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What is Benchmarking? Explain briefly the eleme...

What is Benchmarking? Explain briefly the elements involved in Benchmarking process.

What is Benchmarking? Explain briefly the elements involved in Benchmarking process.

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Kanishka Apr. 17, 2018

Definition of benchmarking:

Whenever an organization lays down its goals and evaluates its productivity by relying on some other organization's performance, then it is said to be following benchmarking approach.

Technically, Benchmarking is an approach to set goals and measure the productivity of an organization based on best industry practices or against the products, services, and methods of its competitors or other acknowledged leaders in the industry. 

Benchmarking developed out of the need to have information against which performance can be measured. 

Benchmarking helps businesses in improving their performance by learning from the best practices and the processes followed in the industry.


Why do organizations use benchmarking?

Organisations follow benchmarking practices to achieve improvements in diverse range of management functions like 

- product development,

- customer services, 

- human resources management, etc.

You may say that benchmarking is a process of continuous improvement in search for competitive advantage.  


What are the various steps in Benchmarking Process?

Benchmarking involves six steps. 

The various steps are:


(i) Identifying the need for benchmarking: 

In this step, the organization 

- defines the objectives of benchmarking exercise.

- selects the type of benchmarking.

- identifies realistic opportunities for improvements. 


(ii) Understanding existing decisions processes: 

In this step, the organization compiles information and data on performance. 


(iii) Identify best processes: 

The organization identifies best processes within the selected framework. These may be within the same organization or external to them. 


(iv) Comparison of own processes and performance with that of others: 

In this step, the performance of an organization is compared against the performance of other. Any deviation between the two is analysed to make further improvements. 


(v) Prepare a report and implement the steps necessary to close the performance gap: 

A report on benchmarking initiatives containing recommendations is prepared. Such a report also contains the action plans for implementation. 


(vi) Evaluation: 

Business organizations evaluate the results of the benchmarking process regarding improvements vis-à-vis objectives and other criteria set for the purpose. 

It also periodically evaluates and reset the benchmarks in the light of changes in the conditions that impact the performance.

What is Benchmarking? Explain briefly the elements involved in Benchmarking process.

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