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Best practice through benchmarking in Egyptian organizations: an empirical analysis.

Introduction

In today's highly competitive, rapidly changing global economy organisations have been focused to consider and implement a wider variety of innovative management philosophies and techniques. One such technique is benchmarking which has been attracting considerable attention for it's effectiveness (Sisson et al., 2003; Rohlfer, 2004; Anderson and McAdam, 2004; Anderson and McAdam, 2004; Rohlfer, 2004; Yasin, 2002). Benchmarking is a relatively new concept and practice "through which organisations continually review the outputs from their operations and identify ways to make changes in their processes so that better outputs result" (Holloway et al., 1998: 2). Benchmarking is identified as one of an ever-growing number of management practices aimed at improving performance (Fong et al., 1998; Cassell et al., 2001; Francis et al., 2002).

As Zairi stated that, "Benchmarking has truly revolutionized the culture of businesses in the West and the way with which it is organized, managed and run. This is very evident when one looks at the number of conferences being organized, the formation of clubs, associations and the launch of journals and magazines specially devoted to the subject of benchmarking" (Zairi, 1996, cited in Jarrar and Zairi, 2001: 907).

Benchmarking has been gaining attention among managers as a means of strengthening a company's ability to compete and achieve superior performance. It has rapidly gained acceptance world-wide as a tool of continuous improvement. As Francis et al. (2002: 239) stated that "benchmarking has become an increasingly important performance management tool that can be used to enable managers to both monitor and improve aspects of their own operational performance by reference to, and learning from, other organisations"". Therefore, benchmarking activities in different organisations deserve attention and critique (Willmott, 1993; Steingard and Fitzgibbons, 1993; Cox et al., 1997). However, there are many organisations in the USA and Europe that promote the use of benchmarking, such as The International Benchmarking Clearing House or The European Network for Advanced Performance System (ENAPS), which provide benchmarking databases and assistance in identifying partners (Carpinetti and De Melo, 2002). Also there are a variety of studies undertaken in the UK (e.g. Ogden and Wilson, 2000; Jones, 2002; Bovaird, 2000; McAdam and O'Neill, 2002; Cassell et al., 2001; Francis et al., 2002), USA (e.g. Min et al., 1997; Gruca and Wakefield, 2002; Siguaw and Enz, 1999; Kumar and Chandra, 2001), Korea (e.g. Min et al., 2002), Singapore (e.g. Brah et al., 2002), Hungary (e.g. Tolosi and Lajtha, 2000; Pataki et al., 1998), Australia (e.g. Gilmour, 1999; Ralston et al., 2001; Godfrey and Godfrey, 1999), Greece (e.g. Papalexandris and Nikandrou, 2000), Brazil (e.g. Carponetti and De Melo, 2002), and Turkey (e.g. Ulusoy and Ikiz, 2001) to explore different aspects of benchmarking. Despite the number of publications and the amount of research into benchmarking, little empirical research has been carried out in the Arab World and more specifically Egypt. There is very little known about benchmarking activities, benefits, and drawbacks in Egypt. Therefore, the focus of the present study was to examine the state of benchmarking in Egypt. In order to investigate the state of benchmarking in Egypt, data will be provided through current practices of benchmarking, benefits of benchmarking, driving forces of initiating benchmarking and the various problems associated with benchmarking in benchmarking and non-benchmarking organizations.

Research Methodology and Organizational Profile

This study is exploratory in nature and seeks to collect data about the state of benchmarking in Egypt. In deciding on the most suitable method for collecting the required data, it is important to note that based on the literature review it was clear that the majority of research about benchmarking has been conducted via quantitative approaches, predominantly through postal questionnaires (Vermeulen, 2003; Kumar and Chandra, 2001; Lee et al., 2006) to cover various issues concerning benchmarking such as the understanding the benchmarking process (Brah et al., 2000); identifying hotels best practice (Min et al., 2002); and benchmarking practices in India (Maheshwari and Zhao, 1994).

The quantitative approach offers some advantages over the ethnographical approach, where it is appropriate for hypotheses testing and generalization. It is clear to highlight that the quantitative approach drawn from nomothetic assumptions, places great emphasis on generalization and less emphasis on detail (Denison, 1990). The quantitative approach is important in QM and benchmarking studies due to its reliability, replication and prediction are fundamental. Also quantitative approach is highly recommended for the current investigation of an incompletely understood, highly complex, situation ally-bound phenomenon (Busha and Harter, 1990). Moreover, quantitative research data are analyzed via statistical procedures to compare a relatively large number of cross-sectional or longitudinal observations with the aim of identifying potentially strong, non-random, correlations between explanatory variables and effects (Mitchell and Bernauer, 1998: 1). While, Regina (1996: 1) stated that quantitative approach involve the precise measurement of variables and the collection of data under standardized conditions from a randomly selected sample, through either a questionnaire or similar written instrument or through an observation protocol. Based on the above highlighted benefits of quantitative methods, the researcher decided to utilize quantitative approach in the current study. Looking into the survey as a method of quantitative methods, it is the overwhelming choice of researchers for collecting primary data (Aacker et al., 1995).

Survey research is designed to collect a wide variety of information on many diverse topics and subjects. A survey can also elicit the respondent's overall assessment and the extent to which the subject is rated as favorable or unfavorable. A survey can be conducted in many ways, ranging from face-to-face interview to a postal questionnaire. In this respect, the research of the current study is utilizing survey methods due to their ability of generalization, versatility, standardization, ease of administration, and suitability for statistical analysis. Results from survey research can frequently be generalized to represent the view of the overall population. This is because the information is often collected from a large sample, representative of the population to which that sample belongs. Moreover, questionnaires as a one method of survey are popular within the various studies on benchmarking due to the fact that they are stable, consistent and uniform statistical measure, provide less opportunity for bias or error than interviews, provide greater assurance of anonymity and can be completed at the participants' convenience (Kumar, 2000). Denscombe (1999) indicated that the postal questionnaire is the best-known research method, involving sending self-completion questionnaires through the post. This generally implies that postal questionnaires can cover wider geographical areas than interviews (Riley et al., 2000), and enable researchers to obtain a large amount of data inexpensively (Sarantakos, 1998). Questionnaires were chosen for this study, due to the popularity of this method in benchmarking research and to enable the researcher to reach the largest sample possible. Further this method was utilized because it is relatively less costly, it can be accomplished with minimal staff and facilities and it can provide access to widely dispersed samples that are difficult to reach, as highlighted by previous researchers (Riley et al., 2000; Sarantakos, 1998).

The questionnaire was developed based on an extensive review of the literature in order to have large statements related to the various driving forces, benefits, and barriers other researchers (e.g., Brah et al., 2000; Jarrar and Zairi, 2001; Elmuti, 1997; Mann, 1997; Hinton et al., 2000) have utilized in their studies. The design of the questionnaire relied upon closed questions and they were chosen to provide the researcher with standardized data and can be presented in an appropriate format that lends itself to being quantified and compared. Also it is utilized in providing pre-coded data, which can be analyzed easily and the gathered data tend to be reliable and valid. Great deal of care was taken in designing the questions to ensure that the respondents would have little trouble in answering them. This is considered important in questionnaire design because there are no interviewers on site who can assist with any problems, unlike in the personal interview or telephone survey situation.

It was decided that the questionnaire would be sent to a target of 500 organizations in Egypt and this chosen sample of 500 would be justified because of the time and cost constraints involved in the research, the researcher felt that 500 was an appropriate sample size, compared well with relevant past studies and enough statistical information can be gained from it. A covering letter accompanied the questionnaire, which explained the nature of the study, asked the participants to fill in and return the questionnaire in the self-addressed enveloped provided and explicitly requested completion of the questionnaire by the managing director (MD) or owner of the business, rather than a person with the title of quality manager or equivalent. This was as MDs have an overview of the entire organization and they are more likely to provide an objective view.

In ensuring the effectiveness of the questionnaire design, a pre-testing was utilized with ten students and three practitioners who provided feedback to refine the questionnaire. A total of 215 questionnaires were returned representing a response rate of 43 per cent. The response

rate (43 per cent) is quite reasonable compared with other studies in the field of benchmarking (Lee et al., 2006). Following the data collection stage, the responses were coded to enable them to be computer processed. The researcher used the software package referred to as Statistical Package for the Social Sciences (SPSS). It is fair to say that the design of the study represents reasonable results since the participants were randomly selected without speculating on their level of understanding of the subject. Therefore, the researcher believes that the data obtained is representative of the overall views on the state of benchmarking in Egypt. The result of the surveyed respondents by sector of activity is presented in Table 1.

Of the 215 organizations surveyed, 86 organizations belong to services, 55 belong to the manufacturing sector, followed by public sector (35), construction (30), and others (9). It is notable that service providers' constituted the largest portion of the participants. With respect to the size of the organizations surveyed (table 2), 34 percent had a staff of less than 100 (classified as small firms), 43 percent had a staff of less than 300 (classified as medium firms), and 23 percent had a staff of more than 300 employees (classified as large firms). Therefore, it can be highlighted that medium sized firms represented a large number of the surveyed ones.

Survey Findings and Discussions

Driving Forces and Benefits of Benchmarking

To assess the effectiveness of benchmarking in Egyptian organisations, it is important to ask what those organisations hoped to gain from using benchmarking. This in turn may reflect whether they were performing benchmarking through a free choice, or because of some pressure from government or other agencies. Therefore, the respondents were asked to indicate the reasons for initiating benchmarking. The results are presented in Table 5. Responses show that 81 percent of the respondents chose to maintain and increase competitive advantage as their main reason for initiating benchmarking, followed by increase profitability (65%), achieve continuous improvement (63%), pressure from government or external agencies (26%), learn other processes (6%), and uniformity (2%). The results suggest that the most important reasons for initiating benchmarking are to maintain and increase competitive advantage, increased profitability and achieve continuous improvement. This finding is consistent with the previous studies, for example Bagchi (1996), Sweeney (1994), Brah et al. (2000), and Kumar and Chandra (2001).

Brah et al. (2000) found that organisations viewed benchmarking projects as successful and gave the following derived benefits from them such as improving quality of goods or services, decreasing costs of operations, and improving customer delivery or response time. While, Coopers and Lybrand (1994) cited benchmarking benefits as the ability to set meaningful and realistic targets, improves productivity, helps gain new insights, gives an early warning of competitive disadvantage, and motivates staff by showing what is possible. So the question here is what are the major benefits achieved through benchmarking in Egyptians organizations. The questionnaire presented respondents with a list of benefits identified from the literature. Respondents were asked to comment on the benefits outlined on a five point scale (1 being none and 5 being very high). The results are presented in Table 3.

The most important benefits derived from benchmarking in Egyptian organisations are improved customer satisfaction with a mean score of 4.34, improved response time with a mean score of 4.24, and quality improvement with a mean score of 4.12. These benefits were classified high level of importance as they achieved mean scores more than 4. Other benefits which were classified as of medium (they achieve mean scores above 3) importance are process improvement (3.79), influencing the strategic decision-making process (3.08), setting of internal standards (3.04), and innovative approaches to business improvement (3.01). However, the weakest benefits witnessed by the respondents are more effective and efficient management of resources (2.79), and improvement in people management (2.76).

The most important benefits identified from the study are supported by the work of Jarrar and Zairi (2001), Elmuti (1998), Voss et al. (1997), and Elmuti and Kathawala (1997). However, the order of the benefits varies among studies depending on the different cultures associated with the different countries. The achieved results within these Egyptian organizations can be contributed to the commitment and support of top management as illustrated in table 7 and also could be due to the fact these organizations understand how inputs are transformed into outputs which enable them to achieve the anticipated results. Also another contributing factor could be the development of a benchmarking culture where the focus is on change processes as well as outputs and on organizational willingness to search for ideas outside the organizations and this is supported through the fact that most of the surveyed organizations were utilizing external partners. Another possible contributory factor to the achieved results are due to the fact these organizations may have followed systematic steps in implementing benchmarking such as planning (e.g. what to benchmark and whom to benchmark against), analysis (e.g. ascertaining the performance gap), integration (e.g. relating gaps to organizational goals), action (e.g. improvement of business processes), and maturity (incorporating best practice into everyday business processes) as recommended by Camp (1989); Vaziri (1992), Drew (1997), and Fong et al. (1998). These factors are supported further by Camp (1995: 15) who stated that benchmarking is an integral part of the planning and ongoing review process to ensure a focus on the external environment and to strengthen the use of factual information in developing plans. Benchmarking is used to improve performance by understanding the methods and practices required in achieving world-class performance levels. Benchmarking's primary objective is to understand those practices that will provide a competitive advantage; target setting is secondary.

Influential Factors for Effective Benchmarking

Many studies indicate that certain conditions must be present to ensure a successful benchmarking experience in organisations. To find out the influential factors for achieving effective benchmarking in Egyptian organisations, the researcher provided the respondents with four statements selected from the literature to choose from. The results of the influential factors for effective benchmarking are presented in Table 7. The responses show that 50 percent of the benchmarked organisations considered top management commitment to be an important factor for effective benchmarking, followed by employee involvement and participation (21%), effective communication and implementation of benchmarking findings (17%), and finally, clarity of benchmarking objectives (12%). It is clear that all the factors were considered important for effective and successful benchmarking, however, the most important influential factor in Egyptian organisations was top management commitment. This finding is not surprising, as it is consistent with other studies. For example, Hall (1996), Burgess (1995) concluded that top management is one of the most important factors for effective benchmarking. Camp (1995), Mann (1997), and Brah et al. (2000) support the study findings further.

Problems with Benchmarking

In this study, the main focus was on organisations that have used benchmarking activities. However, as demonstrated earlier in the study that 60 percent of the surveyed sample was not involved in benchmarking. Therefore the researcher intends here to find out the main reasons for not benchmarking. The main reasons for not benchmarking (Figure 1) are data comparability, and lack of resources (time and money). Hinton et al. (2000) and Stephens and Bowerman (1997) have reported similar findings to this. In addition, some of the respondents (17%) felt that their current company practices are sufficient. Therefore, the idea of benchmarking has not been rejected, they have made an informed decision concerning whether to implement benchmarking or not at the present time of the study. This finding is supported by Hinton et al. (2000: 58) who stated that "Those who considered it inappropriate generally appear to have made informed decisions based on an appreciation of the characteristics of benchmarking and their own circumstances, rather than merely rejecting it out of hand".

[FIGURE 1 OMITTED]

Conclusions and Summary

Benchmarking is considered as a tool of Total Quality Management (TQM) (Kumar & Chandra, 2001), which it can be used in organisations as a means of strengthening a company's ability to compete and achieve superior performance. Benchmarking has rapidly gained acceptance worldwide as a tool of continuous improvement, but little empirical research has been carried out in the Arab world and more specifically Egypt, were the main motivators behind undertaking this study. In this article, a study was carried out to investigate the state of benchmarking in Egyptian organisations. A response rate of 43% was obtained. This response rate is quite good compared with other studies in benchmarking.

The findings suggest a clear involvement in benchmarking activities among various industry sectors in Egypt, and this in turn suggests that benchmarking is perceived as an important tool for continuous improvement in those organisations. Moreover, large organisations were performing benchmarking activities than small ones, and more likely to be benchmarking than small firms. This is due to small firms characteristics such as lack of time, resources and knowledge. The majority of Egyptian organisations sample were in favour of using external partners of the same industry, which suggest that these organisations are looking beyond their organisational boundaries for benchmarking partners and tend to focus on the same industry where their experience and knowledge are most valuable.

The most important reasons for initiating benchmarking among the Egyptian sample include maintaining and increasing competitive advantage, increasing profitability, and achieving continuous improvement. The reasons cited here suggest that Egyptian organisations are performing benchmarking through a free choice, not because of some pressure from government or other agencies. However, after those organisations have implemented benchmarking activities, they viewed benchmarking projects as successful and provided the following important benefits such as improved customer satisfaction, improved response time and quality improvement. Certain conditions were evident in the present study to ensure successful and effective benchmarking activities, for example, the most important influential factor in Egyptian organisations was top management commitment. This finding is not surprising, as it is consistent with other studies (e.g, Hall, 1996; Burgess, 1995). However, as the present study suggested that 60% of the sample were not using benchmarking activities. The main reasons were lack of data comparability and lack of resources, but the idea of benchmarking has not been rejected, as 17% of the sample felt that their current company practices are sufficient.

The findings presented in this article have possible implications for Egyptian managers. Effective implementation of benchmarking activities will likely improve customer satisfaction, improve response rate and quality and process improvement. These benefits will probably produce financial benefits and competitive advantage. In order to implement effective benchmarking in organisations, Egyptian managers should be aware of the importance of top management commitment, employee involvement and participation and effective communication. These issues are considered to be influential conditions for effective benchmarking. However, in order to achieve the true benefits of benchmarking, it should be made consistent with organisation's strategic direction and the provision of the appropriate resources.

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Hesham Magd

College of Business Administration, Prince Mohammad University, Saudi Arabia

Corresponding Author

Hesham Magd can be contacted at: hmagd@pmu.edu.sa
Table 1: Demographics profile of participants (n-215)

Sector of Activity

Sector Number of Percentage of
 participants participants

Public 35 16
Manufacturing 55 25
Construction 30 14
Services 86 40
Others * 9 4

Size of Firms

Number of Number of Percentage of
employees participants participants

1-100 (small) 73 34
100-300 (medium) 92 43
300+ (large) 50 23

* Other organizations responded to the survey were energy (oil
and gas refineries and production), aviation, mining and
telecommunications.

Table 2: Reasons for initiating benchmarking

Reasons No. of % of
 participants participants *

Increase profitability 56 65

Maintain and increase competitive 70 81
advantage

Achieve continuous improvement 54 63

Pressure from government or external 22 26
agencies

Learn other processes 5 6

Uniformity 2 2

* Percentage values do not add to 100 because
participants choose more than one reason.

Table 3: Benefits of benchmarking

Benefit Mean score * Level of importance

Improved customer satisfaction 4.34

Improved response rate 4.24 HIGH

Quality improvement 4.12

Process improvement 3.79

Influencing the strategic 3.08
decision-making process MEDIUM

Setting of internal standards 3.04

Innovative approaches to business 3.01
improvement

More effective and efficient 2.79 LOW
management of resources

Improvement in people management 2.76

* 1 = none, 2 = some, 3 = average, 4 = high, and 5 = very high.

Table 4: Influential factors for effective benchmarking

 Factor No. of participants % of participants

Top management commitment 43 50

Employee involvement and 18 21
participation

Effective communication
and implementation of 15 17
benchmarking findings

Clarity of benchmarking 10 12
objectives
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Author:Magd, Hesham
Publication:Global Business and Management Research: An International Journal
Article Type:Report
Geographic Code:7EGYP
Date:Jan 1, 2011
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