BENCHMARKING AS A PERFORMANCE MANAGEMENT STRATEGY IN THE MANUFACTURING INDUSTRY (A CASE STUDY OF THREE MANUFACTURING FIRMS IN ABA, ABIA STATE)

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CHAPTER ONE

                                      INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Organizations vary in their performances. Some register high performance while some register low performance. Even, some organizations’ performances show a cyclical trend over a long period of time. However, high performance can be maintained for a relatively long period if organizations take necessary measures to avoid performance drawback (Adei, 2006: 18) it is therefore important for companies to initiate and implement measures that will ensure that their performance conforms with best practices in the industry. This can be achieved through benchmarking which organizations can measure themselves against their industry practices and other competitors (Medrano, 2007:43).

Benchmarking is a performance management tool used initiate performance improvement. It measures comparative performance of companies and brings innovative ideas that can be implemented in different industries with an adopted process (Aimiuwu, 2007: 28). Through benchmarking, business processes can be compared among different

organizations. It promotes superior performance giving an organized structure for companies to learn how “the best in class” do things, understand how other companies methods differ from its own and fund the gaps that will change and improve its process (Oladunmi, 2005:40). Since benchmarking is a tool used to manage performance, many organizations use it to generate data leading to process and performance improvement.

Benchmarking opens organizations to new methods, ideas and techniques to manage their performance with a view to improving their effectiveness. It helps to crack resistance to change by demonstrating other methods of solving problems than the one currently employed by the company. Through benchmarking a company ensures that it produces a high quality product whose standard compares with “the best in class” in the industry (Ugbaja, 2008:19).

Since benchmarking is performance management tool, not a philosophy properly or a strategy, it must be used properly. It will be helpful if not offer much opportunity for improvement.

The application of benchmarking as a tool of Total Quality Management (TQM) in manufacturing firms may usher in the climate of change and continuous improvement in all the areas of operations. In other words, benchmarking may be a very good intervention technique for a positive change, and for manufacturing firms to survive in a competitive business environment, there is the need for the acquisition and exchange of practices among the firms (Agbaeze, 2007:158).

Through benchmarking, a firm can maintain high performance over a long period of time, initiating and implementing measures that will ensure that its performance that conforms with best practices in the industry in which it operates. This calls for effective performance management predicated on benchmarking.

Performance management incorporates the configuration and measurement of distinct output areas. Performance indicator provides the mechanism by which an organization measures critical business tool, particularly in translating a strategy into result. Thus, in the manufacturing sector, performance management significantly drives organizational

performance, individual performance, career planning, succession planning, training, transfer and business strategy (Ewurum, 2006:1) amplifies this when he states that in performance management, effort is made to capture and coordinate all the issue that will make for the delivery of effective performance by organization members.

Manufacturing concerns are not performing optimally in Nigeria today. According to (Ifedi, 2010:9) there is little doubt that manufacturing firms in Nigeria have since the early 1980s been endangered. In order to manage the performance and achieve set goals in the highly competitive business environment, most manufacturing firms have been engaged in benchmarking. It is against this background that this study sets out to examine benchmarking as a performance management strategy in manufacturing industries.

 

1.2    STATEMENT OF PROBLEM

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