Benchmarking For Better Performance


Benchmarking For Better Performance

Benchmarking is the process of measuring and comparing the performance of a firm against the performance of the market empires or best practices of the other firms.  It is the process of adapting and acquiring the best performance such as improving strategies, policies, infrastructure, decision-making, and implementation, etc.  Benchmarking is an effective tool which enables an organization in identifying its strengths and weakness;   it also helps a firm to know the opportunities and threats from the external environment.  Through which achievement of organization’s goals and competitive advantage is possible.


Competitors and world-class best practices are identified by the proper research and by using various tools.  Benchmarking process accelerates the change in the organization; it helps the organization to become more competitive.  The core competencies acquired by the organization can differentiate them from others.


The primary focus of benchmarking is to become more competitive and unique.  Though the ideas may be borrowed or acquired,   it keeps an organization unique and successful.  Here acquiring and reaching world-class best performance is not possible at a single step.  It takes time and efforts, which may involve learning from others success,  acquiring or borrowing ideas,  become best in the industry, beating the industry standards,  become best in core competencies and finally gaining national leadership, which enables to become a world-class leader.

Types of benchmarking

Depending on the acquired knowledge and areas of performance improvement benchmarking is of various types.


Operational or Performance Benchmarking:

In this type, features, performance characteristics, quality, and cost, etc are compared with the best practices.  Here products and services of the industry are compared and analyzed.

Functional or Process Benchmarking:

Process benchmarking mainly concentrates on the work process and technology of the competitor firms.  It helps in acquiring creative and innovative ideas, techniques and process which enhances the organization’s efficiency. Here the standards are taken from any industry to become successful in a particular area.

Strategic benchmarking:

In strategic benchmarking, the companies studies, analyze and compare the strategies formulated by the benchmarked companies.  Here they compare the strategies related to the cost, distribution, service, suppliers, sales force and research, etc.

Product benchmarking:

Product benchmarking involves identifying, analyzing and comparing the existed products and services in the markets and their best features are considered as standards.  These standards are used to update or create products and services.

Financial Benchmarking:

Financial benchmarking involves identification and analysis of financial performance of the benchmarked companies.  Formulation of financial strategies, policies, and implementation is done on the basis of acquired knowledge from benchmarked companies.

Internal benchmarking:

If the benchmarked standards are taken from the organization itself, here various departments’ performance can act as benchmarked standards. It is a very successful process, through which the employees can get motivated by the performance of their peers. Internal benchmarking gives quick results and easy to implement.

External benchmarking:

Here the benchmarking companies are outsiders or other companies which may belong to the same industry or other industries. Compared to the internal benchmarking, external benchmarking is tough to implement and it takes the time to collect data, analyzing data, communicating results and for implementation.

International benchmarking:

In international benchmarking, world’s best practices are taken as performance standards. Here benchmarking is done with those companies outside the country to win the world’s market share.

Process of Benchmarking:

The process of benchmarking involves various steps, which are discussed as follows.


Identifying the areas to be improved :

Benchmarking process starts with the identifying the performance to be improved which may be costs, technology and employee performance etc, and these are subjected to the further process of benchmarking.

Finding better performed and successful companies:

Once the weaknesses are identified then the next step is finding better-performed companies to make those firms as benchmarked companies.

Collecting data:

Which doing the process of benchmarking the data related to company’s policies, strategies, technology, process, Company’s internal and external strengths are gathered.  Here the data is collected through various research tools and techniques.

Analysis :

The collected data is subjected to analysis for the purpose of clear examine, understanding and to create findings by using various statistical techniques.


Data analysis gives the difference between current performance and performance need to be achieved. The performance gap guides the managers to frame strategies for achieving expected results.

Taking necessary actions:

The final result of data analysis is submitted to the higher levels to get the approval for implementation and to take further decisions to achieve the desired performance.


Organizations want to compete successfully in the long run, and then they have to continue the process of benchmarking for different areas of the organization which enables the organizations to check whether they have reached the customer expectations and quality standards or not.

Importance of benchmarking

  • It helps an organization to know its actual performance
  • It helps in developing competitive advantage
  • Helps in improving employee performance
  • It helps in maximizing productivity
  • It helps in fulfilling the unmet needs of the customers
  • Cost reduction is possible
  • It brings motivation among the employees
  • Help to get customer loyalty
  • Enables to reach the market empire
  • Quality products and services can be delivered