Benchmarking Your Way to Performance Improvements
What is Benchmarking?
Benchmarking is simply comparing the performance of your farm to the performance of other farms in key areas. Comparisons can be anything from fertilizer applied per acre to financial ratios of your farm. It is probably one of the most important tools you can use to identify the gaps in your farm’s performance.
Although experts can divide benchmarking into many types, the two main types are informal and formal. FamilyFarms Group provides excellent opportunities for both.
Whether you know it or not, you are probably familiar with informal benchmarking. We do this every day almost subconsciously. We are constantly comparing how we do things to how others are doing them, and planning how we might use that new knowledge to improve our own performance. Whether it’s how someone is performing a field application, how someone cooks a meal, what they do when trying to lose weight, or any number of things, the fact is, we all use informal benchmarking every day.
Formal benchmarking requires a little more accuracy. There are two primary types of formal benchmarking that we frequently utilize at FamilyFarms Group: best practice benchmarking and performance metric benchmarking.
Best practice benchmarking occurs when a producer searches out other farms that have best practices in a particular performance category of interest. The processes behind those best practices are studied in depth. The knowledge gained through this process is brought back to the home farm and applied where appropriate.
Performance metric benchmarking involves comparing all levels of performance within the farm to performance data from multiple other farms. This process will identify gaps in performance of your farm and can be very eye-opening. Once gaps are identified, the details are studied to determine the reasons for the variance, and action plans are created to address the gaps. This process can bring significant improvement to the performance of your farm.
Several FamilyFarms Group peer groups have embraced the benchmarking process and are making significant strides in the performance of the participants’ farms. The General Manager (GM) peer group has made farm benchmarking a primary focus of the group since the topic was introduced in early 2012. GM peer group members Aaron Lee and Jim Sladek were both featured in the November 2013 Corn and Soybean Digest magazine in an article titled, “Compare your financials to peers. A financial benchmarking tool provides perspective.” Both Aaron and Jim are participants in the FamilyFarms Group GM peer group. In the article, Aaron was quoted as saying “You have to be ‘all in’ for financial benchmarking to work; it’s relationship-driven. It takes time to build trust and share all of your data, but it’s well worth the effort.” Jim Sladek said in the article, “This year, we are looking at profit and loss statements and balance sheets by crop.” He goes on to say, “This really opens my eyes where I need to focus and what I can impact now, instead of waiting until year-end and making adjustments.”
FamilyFarms Group has expanded our farm benchmarking programs to other peer groups and will continue to expand in the future. After the first session on benchmarking, a peer group participant said, “This will be the one of the most powerful tools we’ve learned about.”
Benchmarking is closely linked to peak business performance in other industries. For organizations to reach “world-class” levels of performance, they must incorporate the process of benchmarking. Row crop farming is no different. Are you ready to see where you stack up?
from Joe Zachman, Senior Vice President of Team Services