BENCHMARKING

Description:

Basic concepts of benchmarking and how it is used in industry today.

Purpose:

To describe the benchmarking process, illustrate its usefulness and describe how individual companies can use it to improve their performance.

When/How to use:

This tool can be used to cover the benchmarking subject. It can also help management to understand the value of benchmarking data and how it can be used to target improved performance.

Benchmarking: A practical definition

Benchmarking has become a "top management issue" as it provides objectively developed information that helps executives to know "where they stand" versus competitors or other leading companies.

Types of data including e.g.

financial comparisons
personnel by function, type or location
development cycle times
quality and service performance.

Benchmarking provides information-containing insight in the gaps to achieve desired goals and objectives. They build the basis for recommendations on changes and improvements to sales strategies, organization, cost, investment, and the like - to "close the gap".

Most companies want to be a step higher than they are - and fear they may be a step lower. Benchmarking can be the vehicle to better understand differences in performance, "Best Practices", and trends as well as to convince and commit management to action.

Taken in total, benchmarking helps the executive to focus on what should be done and then take the right strategic (and operational) decisions.

Surveys for the purpose of developing comparative data have been available for many years. However, these approaches, although differing in sophistication share a common philosophy - providing data so that one company can compare itself against the average performance of those in the database.

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