Spring 2006 issue of Horizons

Benchmarking need not be limited to external comparison analysis. Perhaps your company has a division with unmatched success that you would like other divisions to emulate. Best practices not only relate to successful financial standards, but also excellence in operational functions or processes. Benchmarking involves identifying desirable attributes of leaders within your organization, industry or sim- ilar processes. How does a company begin the benchmarking process? 1. Identify your company's critical success factors. 2. Determine where your company ranks relative to the best performers. 3. Measure the gap and brainstorm ways to improve (remembering to use the best performers as a guide - maybe you won't have to reinvent an entire process). 4. Establish goals (don't forget to stretch!). 5. Develop action plans and implement changes (incrementally if necessary). 6. Monitor progress. 7. Revisit and revise as needed. A successful benchmarking process requires management commitment, thorough planning, a desire to strive to be better or even the best, and a willingness to change. Positive results in both financial performance and productivity can be very rewarding. There are numerous resources available to help you begin the benchmarking process. One of the better-known publica- tions on benchmarking is the Risk Management Association's (RMA) Annual Statement Studies. This publi- cation provides financial benchmarks based on the review of more than 190,000 statements separated into more than 700 industries utilizing the North American Industry Classification System (NAICS) codes. RMA will provide you with five-year trend data, as well as common-size balance sheet and income statement line items segregated by asset and sales size for each NAICS code so that you can find a more suit- able match for your company. Hoover's Inc., Integra Information and D&B also are all well- known providers of comprehensive company, industry and market intelligence. RubinBrown utilizes benchmark information daily in its approach to providing assurance services to its clients. RubinBrown's Business Performance Analysis© (BPA) approach focuses on understanding all aspects of an organ-

ization and evaluates the overall effectiveness of an organi- zation. Our process incorporates an ongoing analysis and comparison of an organization's results and operations to its peers and industry utilizing the methods discussed above. The BPA process results in a unique report for the compa- ny's board and management, giving an overall summary of some of the organization's strengths and opportunities for improvement. The report includes analyses to pro- vide financial knowledge to assist the management in managing its responsibilities as board members and management. Individuals from the client service team spend considerable time with management discussing the results documented in the BPA and discussing ways for management to improve results or processes. Every company or organization must employ some form of benchmarking at least annually to assist with strategic planning. It also is important to complete the benchmark- ing study prior to a company merger or acquisition to assure a higher probability of sustained growth. Having the courage to complete an honest and unbiased assessment of your company or organization is not easy. Involving a consultant with the right resources may be the first successful step. Questions? Contact either Felicia Malter, Manager, Assurance Services Group 314-290-3249 felicia.malter@rubinbrown.com or Liz Arro, Manager, Assurance Services Group 314-290-3292 liz.arro@rubinbrown.com

20 • spring 2006 issue