Benchmarking Definition

Benchmarking is a process that has been around us for quite a long time now, and the more we understand the definition of this systematic system, the more changes we make to the benchmarking process; but what is it and how can it help us? If you are a business owner, especially if you are just starting, it is important to be able to compare the services or products you provide, the processes in place in order to perform your activities and even the way in which you reward your personnel. Benchmarking is the process in which you are able to compare a company against another or even one department within the same company against another. The main idea of a benchmarking process is to identify who performs better; if you are comparing the sales department in London against the one in New York, a good structured benchmarking exercise will allow to identify who makes the most profitable sales, who performs better and the most important thing, why are they better; this will let you take the actions needed in order to be the best by improving your performance and attacking your weakest points identified.

Benchmarking Process Benefits

1. Competitive Advantage: the main benefit is to identify where you are at the moment in comparison to your main competitors and the reasons of why your business is behind others; by identifying the factors that are holding you back; this will give you an opportunity for process improvement and the opportunity to be the best in your market. 2. Understanding of the External Environment: by analysing other companies within the same sector; this will let you know if the external problems you are having are the same being faced by your competitor; example: lack of reliable providers. 3. Process Improvement: understanding the external environment will provide some of the tools needed to achieve competitive advantage; however, without process improvements; this will not be feasible; improving the areas where you are behind will put you on a different level. 4. Clear and Concise Objectives: it will set objectives and clear targets to improve operations, processes and even performance of people. The importance of clear objectives relies in the motivational effect that has in the people responsible for providing results. 5. Personnel Retention: More companies nowadays are also performing personnel benchmarking in terms of salaries, benefits and satisfaction; this will allow to reward the staff depending on what the average market does; this is especially important for key people in the organisation.