By Diane M. Calabrese / Published April 2018
The 2018 Winter Olympics demonstrated resoundingly that a quest for excellence leads to extraordinarily good results for all competitors. There were ties to the hundredth of a second in bobsledding. Triple jumps in ice skating became the norm instead of the exception.
Sports competition is a form of benchmarking. It allows competitors to demonstrate their strengths. It also gives competitors a chance to assess their weaknesses and make improvements.
The CETA benchmarking program is a form of quiet competition. Data submitted by individual firms are held in strict confidence and company identities concealed.
By participating in benchmarking, CETA members get vital feedback. “It gives me a gauge or standard to compare my business against,” says Dennis Black, president of McHenry Pressure Cleaning Systems Inc. in Frederick, MD.
Small, specialized businesses have a greater challenge finding accurate measurements to analyze their performance, explains Black. “Of course, you do not need benchmarking to determine if you are making money, but you do need it to determine if you should be making more money.”
Black says he extracts so much valuable information from benchmarking that it’s difficult to highlight one example. Inventory analysis and revenue dollars per employee are just two good examples of many.
“We have participated in the program from the beginning,” says Black, “and we are looking forward to more CETA members participating. The more participants, the better the information.”
Chris Meyer, controller at Ben’s Cleaner Sales Inc. in Seattle, WA, also points to the value of information provided about inventory as an illustration of the value of benchmarking. The analysis makes it easier for his company to reduce “the amount of items that are overstocked at any one time,” he explains.
Every business has ideas about how to boost the bottom line. A quantitative handle on the process fortifies initiatives. With benchmarking, it’s possible “to get quick guidance on the best places to improve our business and its bottom line,” says Meyer.
Knowing the revenue generated per employee or the dollars of profit generated per employee can give an owner a clear-eyed view of year-over-year results. Just looking at whether a year ended in the black can be deceptive, explains Roy Pennington, owner of Hi Pressure Cleaning Systems Inc. in Houma, LA.
Pennington used results from a benchmarking analysis to motivate employees to commit to “running leaner, harder, and faster” by analogizing: What if the bottom line were a salary? He reminded employees that they would still be earning a salary whether they earned $68,000 per year or $6,800 per year, but the factor of 10 would make a difference in their lives.
Because Pennington operates from two different locations as separate entities, he had the opportunity “to ‘benchmark’ one store against the other,” he explains. “However, this is tantamount to being asked, try these two flavors of ice cream and tell me which one is better. Getting the opportunity to use current, real-time benchmarking data from the rest of our industry has been like taking me to 31 flavors at Baskin Robbins and asking me to select my favorite.”
The economy in Pennington’s region has been shaken by the loss of 16,000 energy jobs during the last three years. “Discovering our strengths and weaknesses is even more important now, as our economy struggles to catch back up with the strengthening national trend,” he says.
Pennington notes he cannot answer the question why some owners do not use benchmarking. “It’s a free benefit of being a CETA member,” he says. “It will only cost a bit of your time, and with the ability to submit income statements, it makes it even simpler. Not using it would be—to paraphrase Yogi Berra—a case of ‘be careful if you don’t know where you’re going, because you just might get there.’”
Profit Planning Group (PPG) in Boulder, CO, is the third-party entity that administers the CETA benchmarking program. “Our participant report provides a clear road map with a performance scorecard, a profit improvement trend analysis, and a prescriptive action plan,” says Brian Rickel, COO of the group.
PPG reports are customized for each firm, explains Rickel. Moreover, members of an industry are only compared to members of their own industry.
The benchmarking results, formalized as they are, can be a persuasive tool when speaking to a bank about a loan or just providing verification regarding a standing line of credit. They are another form, a robust form, of supporting documentation about the financial health of a company.
As Pennington notes, benchmarking via the CETA program is so streamlined a company can simply answer questions about operations and then attach their financial statements. Rickel’s group can take care of the rest.
Participation in benchmarking is not time consuming. “We’ve polled participants about this,” says Rickel. “They confirm that the survey can usually be completed in about an hour. To help folks out, we offer to do heavy lifting for them by having our staff CPAs complete the sometimes-difficult financial sections.”
The creative ways in which participants in the CETA benchmarking program use results continue to unfold. With the basics in place, a business can consider new directions and destinations.
“Our goal was to educate folks about basic critical, financial, and operational aspects of their businesses and help them track, plan, and improve their performance,” says Rickel. “It’s very satisfying to know what we do helps folks in a very practical way.”
Alkota Cleaning Systems Inc., Kärcher North America (KNA), and Mi-T-M Corporation are CETA benchmarking sponsors. They make it possible for their distributors to participate at no cost.
Gregg Brodsky, senior western sales manager at Alkota, was a key player in getting the CETA benchmarking program going. He explains that sponsorship by his company actualizes its commitment to being a partner in business to its distributors.
“Benchmarking is a long-term pillar program that CETA’s board of directors has mandated be supported alongside the bylaws of the organization…,” explains Brodsky. As a designated pillar program, benchmarking “will continue to be built upon from revolving board to board” and it will yield “a clear vision or pulse of the industry’s future” in successive years.
The nine years of support by CETA on which the current benchmarking program stands is noteworthy, says Brodsky. “It is critical to understand the very premise of benchmarking and the gathering of verifiable history of one’s venture. Benchmarking is not a one-time event. It requires annual participation to stay on course.”
Brodsky reinforces the critical need to know where one’s going. “Traveling in today’s world without proper navigation and the ability to reroute in motion is a disaster in the making,” he says.
The current chairperson of the CETA benchmarking committee is Laura Niessner-Pyatt, the product category director at KNA-Denver. In her reflection about her company’s sponsorship, she nicely sums up the philosophy of all participants.
“Our company is proud to be a company sponsor for the CETA benchmarking efforts for the third year running,” says Niessner-Pyatt. “Benchmarking makes our industry stronger and helps us individually know where we can improve our organizations. This is critical to the growth of all our CETA partners, and I ask you to participate in supporting these great efforts.”