When reviewing services it is recommended that benchmarking is conducted with high performing organisations (both private and public) to compare the council’s services against best practice. A range of areas may be benchmarked including service outputs, levels of service (quality, timeliness, etc), costs, processes, work practices, resource usage, technology, and user charges.
There is considerable variation amongst councils in the extent of benchmarking conducted across services. As an example, for the operations areas extensive benchmarking of service costs may be carried out, while for other services there may be simple comparisons of measures with other local government teams.
When identifying possible opportunities for improvement, areas may be explored where performance is low, relative to costs. Benchmarking may initially cover only service levels to inform the next step in the process. Subsequent benchmarking of service delivery methods and internal operations could then be carried out after levels of service have been reviewed.
A range of internal benchmarks can also be useful, such as comparing:
- Current and prior year actual performance
- Prior year budget to actual financials
- Whether the cost of the service has risen more than the Consumer Price Index (CPI)
- Whether the staff component of the service has risen more than the CPI
- Whether the unit cost of a particular service is increasing or decreasing, for example, the cost of child care per child or per staff member.
Councils that critically consider alternative modes of service delivery, such as outsourcing, shared services and joint ventures may rely on the benchmarking of their services as a means to assess the viability of the available options.
Consideration should be given to the timing of benchmarking activities. Benchmarking too early in the process can create confusion, and benchmarking too late may not provide sufficient learning opportunities. As an example it may be appropriate for the Service Review Team to firstly spend time defining the purpose and the outputs of the services.
The SmartGov Team