Understanding the benchmarking methodology

Our methodology provides comparison of client data to statistical reference points operating at specific levels of efficiency

For each function, we take all peer group members and sort them by the value of their opportunity metric. The opportunity metrics are:

  • Finance cost as a % of revenue
  • IT cost per end user
  • HR cost per employee
  • Sales cost as a % of revenue
  • Marketing cost as a % of revenue
  • Indirect Materials cost as a % of revenue
  • Legal cost as a % or revenue
  • Real Estate cost as a % of revenue
  • Corporate Services cost as a % of revenue

The Low-Cost Performer (LCP), Median and High-Cost Performer (HCP) are then selected by selecting the company (or companies) which represent the 1st, 2nd and 3rd quartiles, respectively

For each metric in a given function, the LCP, Median and HCP represents a company operating at the set level of efficiency. This provides a realistic picture of the actual gives and takes a company will make to operate at a specific cost

In the above example, the LCP may have a  higher labor rate than the median and could be due to having fewer   overall staff and therefore fewer non-managers required to perform a process

Was this article helpful?
0 out of 0 found this helpful