Benchmarking: A Practical Guide for Federal Agencies

Mission-support functions are integral to an agency’s operations. These administrative or back-office functions—acquisition, financial management, human capital, information technology and real property—are normally managed as cost centers. Managed well, using advanced technologies and analytics, they have the potential to transform an agency’s operations and reap substantial cost savings, allowing managers to put more resources into mission delivery.

Over the years, agencies have been increasingly focused on improving the efficiency and effectiveness of mission-support functions. Benchmarking, which enables a clear comparison of the cost and performance of the same function across different organizations, can play a critical role in this.

The Obama administration launched a cross-agency initiative, Benchmark and Improve Mission-Support Operations, which aims to establish governmentwide cost and quality metrics across mission-support functions—contracting, financial management, human capital, information technology and real property. Currently, in its third year of data collection, it provides a significant opportunity for the next administration to build on the effort. The data could inform policy decisions, provide a platform for agencies to share best practices and lessons learned, and provide agencies with useful diagnostic tools and resources.

To truly benefit from the effort and make it sustainable, it is important for agencies to institutionalize this culture of performance management. Monitoring performance on a continual basis allows executives to be proactive to improve performance, rather than focus on it after the fact.

Here are some practical steps for setting up an internal benchmarking program:

Establish a cross-functional coordinating program. Benchmarking across functions requires a collaborative approach and involves coordination with multiple stakeholders across the agency and its bureaus. A central program office, with representation from each CXO function and the agency’s components can provide a clear line of sight to agency leadership. More importantly, given the scope and cross-functional nature of the activity, it is imperative for this central entity to provide transparent and frequent communications to all key stakeholders.

Identify key metrics. As a first step, CxOs must identify the right set of metrics that align with the vision and goals established by agency leadership and other governmentwide management initiatives. The metrics identified in the Benchmark and Improve Mission-Support Operations initiative serve as a good starting point. These are external benchmarks that allow agencies to compare their performance with that of their peers. CXOs may want to track additional metrics to identify opportunities for improvement.

Identify champions and communicate vision. While there are some pockets of excellence in government, the concept of using data to drive decisions and improve performance is still maturing and faces resistance. It requires leaders with a continuous improvement mindset—leaders who can sell the vision to their peers and colleagues to ensure that it does not become a compliance exercise. They need to incrementally transform the culture of the organization. While executive sponsorship is critical, it is important to ensure the expected benefits (to the agency) trickle down throughout the organization.

Align management systems to provide data. Management systems allow agency leaders to track enterprise performance and should ideally be integrated in the benchmarking effort to collect data. Too often, management systems do not provide real time data on performance—data needs to be collected in a manual fashion from disparate systems and many of the systems are not interoperable (ex: financial management systems and acquisition systems). Automating data collection reduces the level of effort significantly.

Establish a process to improve data quality. Better data enable better decisions. But waiting for perfect data will result in inaction. Agencies need a balanced approach since improving data quality is a necessary, but lengthy process. Agencies must set up a process to incrementally improve the quality of data in the agency. As described above, automating data collection from the authoritative management systems not only reduces the burden but also reduces issues with data inconsistencies and accuracy.

Benchmarking is an important first step to achieve continuous improvement: it provides a structured approach to improve the performance of an organization by identifying and applying best practices and serves as a baseline to diagnose the drivers that impact performance. It is imperative for the next administration to continue and expand on this important initiative; however, it requires focus and planning at the agency level as well to make it sustainable.   

Sukumar Dwarkanath is president of the Parnin Group, a management consulting firm that serves public sector organizations.