What is Benchmarking in Business?

3 min read

What is Benchmarking in Business?

One of the essential parts of running a business is to evaluate the performance. This evaluating process is going to reveal whether your business is performing well or not. The best option you can choose in this case is benchmarking.

There are certain industry practices that the companies within the industry have to follow. Benchmarking in business can be described as a way to compare those industry practices against your own company’s processes. It helps companies to recognize performance gaps. So, let’s take a closer look at what it is and how companies benefit from it.

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What is Benchmarking in Business?

What is Benchmarking in Business?

You can apply to benchmarking against any product or process you want. The same can be said for any function or approach taken in the business. There are specific and regular focal points for benchmarking initiatives. The initiatives consist of measuring time, quality, cost as well as effectiveness.

There is another initiative: customer satisfaction. It is the most crucial initiative of them all. Customer satisfaction dictates whether the business can continue its usual operations or not.

As mentioned above, the primary purpose of benchmarking is to draw comparisons between two operations. One of those operations is yours and the other belongs to your competitor. When it is done properly, it will become easier for you to generate ideas that in turn improves the processes. On top of that, it improves approaches as well as technologies.

This results in costs getting reduced and profits getting increased. It can even help you by strengthening customer loyalty and increasing customer satisfaction.


Should Your Company Benchmark?

You can strengthen a certain process within your company through benchmarking. There are companies that benchmark for improving discrete parts of their business. It allows them to observe and scrutinize the shifting strategies of their competitors.

No matter what cause you may have for benchmarking, it surely helps by cultivating an outward view of the industry. So, it naturally includes the competitors as well. As such, it is a crucial part of management practices and can be effective.


What is the Benchmarking Process?

What is the Benchmarking Process?

The process of benchmarking includes looking at the external parts. This goes beyond a specific business, industry, organization, etc. You can do it as a means of examining the ways in which competitors achieve the desired performance levels. In addition, it can help you get a better idea about the procedures they use.

This is how it helps to elaborate the procedures behind the excellent performance. You need to apply the lessons you learn from a benchmarking exercise in a precise manner. If done right then, it will certainly result in improvement in important functions of an organization.

There is a total of four crucial steps that are a part of the benchmarking process:

  1. Comprehend the current business processes in a detailed way
  2. Perform an analysis on the business procedures that others have
  3. Create a comparison between the procedures of own business and others that are analyzed
  4. Execute the steps needed for closing the performance gap

It is not a good idea to consider benchmarking as a one-off exercise. This needs to be an effective process that delivers results. In order to do that, you need to let it be an essential part of a non-stop improvement process.

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What Types of Benchmarking are there?

What Types of Benchmarking are there?

There are several types of benchmarking. Here are some of the most important ones and what they are suitable for:

Strategic Benchmarking

If your business needs to improve the overall performance badly then you need to use strategic benchmarking. In this process, you will need to scrutinize some of the best performers. To be precise, you need to scrutinize their general approaches alongside their long-term strategies. The goal for you is to find out what led to their success.

It may seem hard to find the right place to start. So, you need to strongly consider the high-level aspects like core competencies. The high-level aspects also include developing new products or services and sometimes both. In addition, it will help your business to improve the ability to deal with changes in an external environment.

There will be obvious changes as a direct outcome of this type of benchmarking. However, it will be hard to execute the changes. In addition, it will take quite a lot of time for this to materialize.

Suitable for:

This process is suitable for re-aligning business strategies that are no longer appropriate.

Process Benchmarking

There may be some critical operations and procedures that need special attention. You can use this form of benchmarking to improve on these areas. There is no way for you to do it alone. So, you need to involve benchmarking partners.

You can seek out these partners from organizations that specialize in similar work. Process benchmarking contains creating process maps. The maps are going to help you to draw comparisons and perform analysis. These processes deliver results that produce short-term benefits.

Suitable for:

It helps with achieving improvements in important procedures and delivers quick benefits.

Internal Benchmarking

As the name suggests, this process involves the business organization itself. This is where you benchmark several business units in multiple countries. There are a few advantages that come with this form of benchmarking:

  • Provides access to delicate data and information in quick time
  • Makes it possible to access generalized data
  • Takes a short amount of time and resource when necessary

This process does not have as many barriers to implementation. After all, the practices that are suitable for the organization can be transferred really quickly across it. However, it may not be as innovative but, it does help to recognize the top performers.

Suitable for:

There are a lot of business units that are a part of the organization themselves. As such, the management is keen on spreading their expertise to everyone that is part of the organization.


You can perform benchmarking in order to create changes. Some of them may be environmental and have an impact. With that said, hopefully, this article has helped you achieve what you wanted to.

Don’t forget: Innovative Thinking: How It Can Help Your Business Grow

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