Benchmarking
Our “Benchmarking” is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost. Benchmarking can also help organizations identify areas, systems, or processes for improvements—either incremental (continuous) improvements or dramatic (business process re-engineering) improvements. Our ‘Benchmarking Process’ provides necessary insights to help you understand how your organization compares with similar organizations, even if they are in a different business or have a different group of customers.
- Focuses on best practices to identify next practices
- Strives for continuous improvement.
- Helps in Partnering to share information.
- Is Needed to maintain a competitive edge.
- Adapting based on customer needs after examination of the best
Classification
Benchmarking can be internal (comparing performance between different groups or teams within an organization) or external (comparing performance with companies in a specific industry or across industries).
We believe Benchmarking, whether internal or external, is used in three key ways as mentioned below:
This is all about better understanding your processes, comparing performance against internal and external benchmarks, and finding ways to optimize and improve your processes. The idea is that, by understanding how top performers complete a process, you can find ways to make your own processes more efficient, faster and more effective.
This compares strategies, business approaches and business models in order to strengthen your own strategic planning and determine your strategic priorities. The idea is to understand what strategies underpin successful companies (or teams or business units) and then compare these strategies with your own to identify ways you can be more competitive.
This involves collecting information on how well you’re doing in terms of outcomes (which could mean anything from revenue growth to customer satisfaction) and comparing these outcomes internally or externally. This can also refer to functional performance benchmarking, such as benchmarking the performance of the HR team (using metrics like employee net promoter score or staff engagement surveys) or the marketing team (measuring net promoter score or brand awareness, for instance).
Internal Benchmarking
The internal benchmarking refers to the comparison of the organizational performance internally. Either with its previous performances or with that of its competitors, i.e., the companies belonging to the same industry. Here, the information is usually gathered and circulated within the organization itself.
Following are the various strategies falling under this category apart from ‘Performance Benchmarking’:
- SWOT: In this benchmarking strategy, the strengths, weaknesses, opportunities and threats of the company are listed out and analyzed by the management.
- Best Practice Benchmarking: The management themselves studies and identifies the strategies and practices of the other companies who are the market leaders, to plan the desired course of action.
- Financial Benchmarking: The management conducts a comparative study of the financial forecast with the actual results or financial reports to find out the areas of shortcomings and take corrective actions.
- Functional Benchmarking: The company compares its performance and products with that of other related industries to innovatively improve its functionality.
External Benchmarking
In external benchmarking, the companies compare their performance with that of its competitors in the industry or across the globe. Usually, by the data collected through associations or third party.
Following are different external strategies apart from ‘Process and Strategic’ Benchmarking:
- Collaborative Benchmarking: To improve the performance standards, the companies belonging to a particular industry collaborate with the industrial associations. These associations provide the benchmarking data on best practices and a comparative analysis of all the companies, to facilitate the improvement of the underperforming companies.
- Product Benchmarking: This strategy focuses on the in-depth analysis of the competitor’s product to know its features and composition. The company uses this strategy to improve and redesign its products.
- Corporate Benchmarking: The company compares its various departments like finance, production, distribution, marketing, human resource, etc. with those of its competitors to enhance the efficiency of each division.
- Global Benchmarking: It is similar to strategic benchmarking, the only difference is that here the company compares its strategies with those of its other branch or the various competitors spread across the globe, to take corrective actions.
Process of Benchmarking
Planning:
- Define a tightly focused subject of the benchmarking study. Choose an issue critical to the organization’s success.
- Form a cross-functional team. During Step 1 and 2, management’s goals and support for the study must be firmly established.
- Study your own process. Know how the work is done and measurements of the output.Identify partner organizations that may have best practices.
Collect
- Collect information directly from partner organizations. Collect both process descriptions and numeric data, using questionnaires, telephone interviews, and/or site visits.
Analyze
- Compare the collected data, both numeric and descriptive.
- Determine gaps between your performance measurements and those of your partners.
- Determine the differences in practices that cause the gaps.
Adapt & Implement
- Develop goals for your organization’s process.
- Develop action plans to achieve those goals.
- Implement and monitor plans.
Monitoring
- As with most projects, in order to reap the maximum benefits of the benchmarking process, a systematic evaluation should be carried out on a regular basis.
- Assimilating the required information, evaluating the progress made, re-iterating the impact of the changes and making any necessary adjustments, are all part of the monitoring process.
Our Components of Benchmarking
For Our Benchmarking, to be effective and to lead to successful performance has to reflect the following elements:
Benchmarking is about external focus and it is essential that all exercises seek to enhance the delivery of quality levels to the end customer.
Benchmarking is a strategic competitive tool and as such it seeks to achieve standards of performance in the market place and to raise the internal standards of effectiveness, making them more competitive.
Benchmarking makes organizations seek to establish standards way beyond meeting basic requirements and to work towards a continuous surge for new ideas, new methods and new ways of working.
Benchmarking gives organizations the impetus and the desire to follow those organizations which are top of the league and which pioneer new change and new innovations.
Benchmarking helps organizations focus on weaknesses and strengthen them. It also enables them to protect areas of strength and ensure that they sustain high levels of competitiveness.
Benchmarking is a practice which encourages individuals to learn continuously and to ensure that their knowledge, skills and areas of expertise are never obsolete.
Benchmarking, if introduced in a direct fashion, will always ensure that organizations are not lagging behind and they are always pioneering the latest practices that the market demands.
Benchmarking reminds people to focus continuously and constantly on the end customer and on market demands, and as such, it changes the culture from internal focus to an external one.
Benchmarking encourages people to work smarter rather than harder, through constantly asking questions related to the practices, their jobs and tasks and to ask why the outputs are lower or higher than those of competitors and other organizations