Benchmarking

BENCHMARKING: WHAT IS IT?
 It can be defined as a process for improving

performance by constantly identifying,
understanding and adapting best practices and
process followed with in the same organization or
from other organizations .
 Is the continuous process of measuring products
services & practices against the toughest
competitors or those companies recognized as
industry leaders.
-David Kearns
 “ Benchmarking is an ongoing outreach activity; the
goal of the outreach is identification of the best
operating practices that, when implemented,
produce superior performance”
 Benchmark refers to a measure of best
practice performance.
 Benchmarking is the systematic search for best
practices, innovative ideas and highly effective
operating procedures. It measures performance
against that of the “ best-in-the-class” organization.
ADVANTAGES OF BENCHMARKING
 Identify current position and determining priorities for
improving environment performance
 Allowing comparisons
 Encouraging regular monitoring of progress
& a process for continuous improvement
 Increasing competitiveness of organization
FEATURES
FEATURESOF
OFBENCH
BENCHMARKING
MARKING
Bench Marking has following characteristics:

 Continuous process: Is systematic and ongoing process
because organization practices keep on changing , practices
are continuously monitored to ensure that the best of them are
identified.
 Measurable: It involves measurement and comparison of
practice across organizations. it is a process of determining the
effectiveness of organizational manager by measuring their
results.
 Goal- oriented: Is adoption of best practices from what ever
sources these may be found . Goal setting ,employe motivation
for improved performance and external orientation are the main
objectives of bench marking.
 Comprehensive: Is applied to all aspects
of an organizations, like products services
processes and practices . It reveals not only
the best practices but also how they are used.
Leading organizations: Is not restricted to

any one organization, it covers the all leading
and excellent organizations across a wide
spectrum of functions.
TYPES OF BENCHMARKING
STRATEGIC BENCHMARKING
 It is used where businesses need to improve
overall performance by examining the long term
strategies and general approaches that have
enabled high performers to succeed.
 It involves considering high level aspects such
as core competencies.
 This type of benchmarking is suitable when the
company has to realign business strategies
that have become inappropriate.
PERFORMANCE BENCHMARKING
 Also know as COMPETITIVE BENCHMARKING

 It is used when organizations consider their
positions in relation to performance characteristics
of key products and services.
 Benchmarking partners are usually drawn from
the same sector.
 This type of benchmarking is suitable for
assessing relative levels of performance in key
areas or activities in comparison with others in the
same sector to find ways of closing gaps in
performance.
PROCESS BENCHMARKING
 It is used by the organization when the focus is on
improving specific critical processes and
operations
 Benchmarking partners are sought from best
practice organization and are drawn from the same
sector.
 This type of benchmarking is suitable for achieving
improvements in key processes to obtain quick
and short term benefits.
FUNCTIONAL BENCHMARKING
 Also known as GENERIC BENCHMARKING

 It can lead the organization to innovation & dramatic
improvements.
 It is used when organizations look to benchmark
with partners drawn from different business sectors
or areas of activity.
 This type of benchmarking is suitable for improving
activities or services for which counterparts do not
exist.
INTERNAL BENCHMARKING
 It involves seeking partners from within the
same organization & from business units
located in different regions.
 The main advantages are access to sensitive data
& information, availability of standardized.
 This type of benchmarking is suitable when several
business units within the same organization
exemplify good practice and management and
want to spread this expertise quickly throughout
the organization.
EXTERNAL BENCHMARKING
 It involves analyzing outside organizations that

are known to be the best in the class.
 It provides opportunities of learning from those who
are at the “learning edge”.
 This type of benchmarking is suitable where
examples of good practices can be found in other
organization and there is a lack of good
practices within internal business units.
INTERNATIONAL BECHMARKING
 This is used when the best practitioners are located
in other countries. This is due to globalization and
advances in information technology.
 There is a need for careful analysis & interpretation
due to national differences.
 This type of benchmarking is suitable where the
aim is to achieve world class status or simply
because
there are insufficient “national” businesses against
which to benchmark.
THE BENCH MARKING PROCESS
Application of bench marking involves five key steps:
1. Understanding in detail existing business process.

2. Analyze the business process of others.
3. Compare own business performance with what of
others analyzed.
4. Implement steps necessary to close the performance
gap.
5. Ensuring superiority.
BENCHMARKING DOS AND DONTS
DOS DON’TS
 Obtain management  Have too broad a scope
commitments  Proceed without
 Obtain resource process modeling
commitments  Use questionnaires for
 Follow code of “process”
conduct
 Have separate
implementation team
 Provide summary
 Design lengthy
reports questionnaire
 Debrief as soon as  Give up!
possible
 Be flexible
GUIDELINES FOR SUCESSFUL
BENCHMARKING
Successful benchmarking requires the following :-
 Thorough understanding of one’s own processes.
 Emphasis on industry best practices.
 Selection of appropriate benchmarking partners
and techniques.
 The benchmarking partner’s willingness to
share information
 Maintaining confidentiality of critical information
 Involvement of management and employees in
the analysis of best practices,
 Emphasis on practices and processes not on
end results.
 Benchmarking should be a continuous process
as the competition is always changing.
 Commitment towards the adoption and
implementation of best practices.
 Selection and empowerment of benchmarking
teams.
 Willingness to change as per the findings of the
benchmarking study.
 The adaptability of the practices should be tested
and the implementation results should be verified.
 Strict adherence to the benchmarking.
LIMITATION TO BENCHMARKING
 Benchmarking is a tough process that needs a lot
of commitment to succeed.
 It is a time consuming and expensive.
 More often than not benchmarking processes end
with the “they are different from us” syndrome or
competitive sensitivity that prevents the free flow of
necessary information.
COMMON PITFALLS IN BENCHMARKING
 Lack of management commitment and involvement
 Not applied to critical areas first
 Inadequate resources
 No involvement of the line organization.
 Scope not well defined.
 To many performance measures.
 Critical success factors & performance drivers not understood
or identified.
 Potential partners ignored
 Poorly designed questionnaires.
 Inappropriate data collection method.
 Too much & inconsistent data.
 Analysis paralysis; excess precision.
 Management resistance to change.
 No repeat benchmarking.

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BENCHMARKING: WHAT IS IT?

 It can be defined as a process for improving

Bench Marking has following characteristics:

Leading organizations: Is not restricted to

 Also know as COMPETITIVE BENCHMARKING

 Also known as GENERIC BENCHMARKING

 It involves analyzing outside organizations that

Application of bench marking involves five key steps:

1. Understanding in detail existing business process.

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