NEW YORK, May 1, 2002 From the evidence, benchmarking is a management tool poised for a renaissance: Fast growth companies using a benchmarking database to measure business performance against their peers are growing considerably faster, and are much more productive than those that do not; and More than 40 percent of all CEOs—current benchmarkers or not—cite high usefulness of a new, broader benchmarking database--one containing more financial and operating metrics, more companies, and more industries. These are highlights of the latest PricewaterhouseCoopers “Trendsetter Barometer,” released today. Currently 23 percent of fast-growth CEOs use a benchmarking database to compare their company’s metrics against industry peers, to determine its relative competitiveness—including advantages and performance gaps. More service than product sector companies do so (27 percent versus 19 percent); and technology than non-tech businesses (24 percent versus 21 percent). Benchmarking database users have distinguished themselves with superior performance, compared to the rest. They have achieved: 69 percent faster growth. Over the past five years their company has increased revenues by 1,835 percent, versus 1,088 percent for those who didn’t benchmark. And, over the past year, in the face of difficult market conditions, it grew at a 13.6 percent rate, versus 11.5 percent--or 18 percent faster. 45 percent greater productivity. On average, their company is smaller in number of employees, and larger in annual gross revenues--with $160,000 in revenues per employee, versus $110,400. “Benchmarking is the first step for identifying performance gaps between a business and its peers. Next, the gaps need to be analyzed to determine their underlying causes, and to develop strategies and plans that address them,” said Brad Allen, leader of PricewaterhouseCoopers’ middle market benchmarking initiative. “The ability to view key metrics for companies on the next rung of the growth ladder is also critical for strategic forecasting, and could identify internal operations to target for competitive advantage.” Going to the Next Level While seven in ten users are satisfied with the value their present benchmarking database brings to their business, well over half (58 percent) cite high potential value in the concept of a broader, next-generation database--for example, one based upon private company data that not only provides financial measures, but operating metrics—including marketing costs, employee turnover, and extent of IT outsourcing--as well. And, among all CEOs interviewed, 42 percent report that such an expanded database would be “very” or “extremely useful” to their business. This includes 13 percent now using benchmarking databases, and 29 percent prospective new users. It is consistent across industry segments, shared by 43 percent of chiefs in product sector companies; 41 percent in service businesses; and 42 percent of technology and 41 percent of non-tech companies. In particular, four benchmarking metrics are cited as being “very” or “extremely useful” by at least half of all “Trendsetter” CEOs--and two-thirds or more of those with a strong interest in the idea of a broader database:

	Total CEOs	Strong Utility
Key financial activity and profitability ratios	56%	79%
Employee producivity	53%	73%
Average sales growth rates	50%	69%
Cost-of-materials, labor and overhead-to-sales ratios	49%	68%

While all four measures are highly valued, more technology companies saw high usefulness in profitability ratios and employee productivity measures; and non-techs and product sector companies rated cost-of-materials, labor & overhead-to-sales ratios higher. Other metrics cited as having high usefulness include cost-per-employee for various functions (49 percent), employee turnover (43 percent), health insurance costs (37 percent), and information technology costs (37 percent). “For many companies, the emphasis during the last half of the ‘90s was primarily on growth. This allowed inefficiencies and flaws to creep into the management of working capital, customer service, and processes,” Allen noted. “Business managers who have routinely skipped measuring these critical areas, to focus exclusively on growth and acquisition, can no longer afford to do so. And, for those already well versed in benchmarking, it’s clear that most are ready to upgrade to a broader database, with more metrics.” How Broader Benchmarking Data Would Be Used Roughly two-thirds of those seeing strong utility in a next-generation benchmarking database see value in it for financial planning functions (67 percent), business planning functions (66 percent), and identifying areas for process improvement (65 percent). Three-fourths said the most useful analytic cross-tab would be peer group data by industry and company size--stressing the capability to analyze competitor groupings. Also cited for usefulness were cross-tabs such as: high productivity companies versus average-to-low productivity companies (43 percent); days sales outstanding by company revenue size (40 percent); and geographic markets, including international versus domestic (37 percent). “Economic challenges from the recession have reawakened the need within companies of all sizes to review their business models and seek out benchmarking metrics addressing fundamental issues--like cost reduction,” Allen added. PricewaterhouseCoopers’ “Trendsetter Barometer” is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc. PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization. If you have a question about this “Trendsetter Barometer” survey, please contact Pete Collins, survey director and publisher, at 646-394-4496 or e-mail to: pete.collins@us.pwcglobal.com For more information about Barometer surveys, including recent economic trend data and topical issues, please visit our web site: www.barometersurveys.com