Project Background
The client was a gas utility company interested in conducting a custom benchmarking study of certain of its Support Services (i.e., Human Resources, Strategy, Information Technology, Corporate Relations, Finance & Accounting, and Regulatory Affairs) in comparison to other gas utility companies considered industry peers.
Problem Summary
The Gas Utility’s management wished to understand why their administrative and general expenses on a per customer basis benchmarked higher than peer companies in an earlier, limited analysis based on public data filed to meet FERC requirements. The client hoped to gain further insight from the benchmarking into which specific Support Services costs were high, if any, and why that was the case.
Areas of interest for this Utility Industry Support Services Benchmarking comparison included:
- Staffing
- Costs
- Outside service usage (intermittent as well as outsourced)
- Information systems use
- Use of performance metrics
TBI was retained to assist the company in accomplishing this benchmarking study, to serve as a technical advisor and an independent project manager who could maintain participant confidentiality throughout the data collection, analysis and reporting process.
TBI’s Approach
TBI began by working with the client team to elicit their information requirements for the survey. The TBI consultants then developed a draft survey instrument that was presented to and further refined through discussion with the client team. Survey design included questions on company size, structure and customer profile to provide context to benchmarking comparisons. It also included a means of recognizing and rationalizing different organizational structures employed by different participant companies. The client organization’s structure was used as the data collection model and any differences in the support services offered by different companies in each Support Service function (e.g., where a company included their payroll service in the Human Resources function instead of in Finance & Accounting) would be specifically reported.
Once the survey content was defined, TBI drafted correspondence from the client company president to 20 potential peer company participants (identified by the client company) inviting their inclusion in the benchmarking study. Peer companies were promised total confidentiality and a summary report in return for their participation; with the client company solely responsible for external project costs. TBI also made follow-up contacts to each invited company to further explain the benchmarking process and motivate their participation. About half of the invited peer companies ultimately agreed to participate in the study.
All participating companies named coordinators for the study. These individuals were provided with electronic data collection forms and written guidance from TBI on the benchmarking survey completion. TBI also provided each participant company with support during the data collection process, providing further definitions where needed and working with all of them to optimize data format and contribution to the study. Once the benchmarking survey data were received from each participating company, TBI also reviewed it for clarity and completeness and returned questions on unclear or missing responses.
TBI was responsible for collecting the data, normalizing cost data for cost of living, performing summary analysis showing median response values and ranges, preparing final reports with interpretive narrative for both the peer company participants and the client company. We also assisted the client company in further interpretation and analysis of the findings, as input to their annual budget process.
Successful Business Solutions
The client received:
- A report contrasting the client company to industry benchmark data on costs, structure, staffing, IS, and performance measurement usage, showing that there was wide staffing, cost and structural variability in the Gas Utility Industry for Support Services and pointing out in which Support Services the client company’s cost and staffing most differed from “average”
- “Blinded” data sets (scrambled within category) that could be used for further analysis, without violating participant confidentiality
- The good will of the peer companies who participated in the study for free, and received summary study results in return for their participation
- Indications of interest from some of the peer companies in participating with the client company in follow-up, more extensive benchmarking on specific service areas.
