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Benchmarking

 

Measuring performance

Benchmarking establishes standard against which performance can be measured. It is used to assess performance and to set targets across a range of business activities.The purpose of benchmarking is to improve efficiency and quality, to determine and promote best practice, to maintain competitiveness and to focus people on the need for change and improvement. Carol McNair and Kathleen Leibfried divide into benchmarking into four categories as shown in following table.

Setting benchmarks

The data should be free from bias or vested interests. Using an external company to gather evidence and measure standards will help to maintain impartiality. 

Successful benchmarking needs everyone to be 'on the same page' and to understand the process. People need to be clear about what is being measured and why, and it is important ti give people the time and resources they need.

While targets need to be realistic and achievable, they need to ensure that standards are maintained and consistent throughout a company and they should seek to continually improve upon performance. To do this, it is necessary to look at both internal and external evidence.

Benchmarking is a continual process that needs to adapt quickly to changes - it is no use measuring activities that are that are no longer relevant or failing to measure activities that are now more significant. To do this effectively, as well as assessing internal operations, you need a keen awareness of your customers, competitors and companies in other sectors.

This ensures that benchmarking is focused on the issues that matter now rather than reflecting the past, and is not blinkered by a narrow, internal focus that risks delivering more of the same.

By enabling you to know what competitors are  doing and what the most innovative, high-performing companies in other industries are achieving, benchmarking will help to maintain your company's competitiveness.