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Benchmarking is the process of comparing an organization’s performance to those of the top standards in the industry, which can be another organization within the industry or an organization in another industry that operates at the level that the industry is hoping to achieve. Generally, the metrics that are compared are the quality of the products or services the organization produces, how much it costs to generate these products, and how long it takes the organization to create them.
Description of Benchmarking
In order to Benchmark, the organization should identify the specific business best practices to focus on, who they will compare themselves to, and compare their chosen benchmarks to identical metrics in the other organization. Benchmarking is beneficial because the organization will be able to understand not only how their competitors are performing, but also what procedures or strategies are being used to accomplish such high performance. With this information, the organization can then begin to brainstorm ways to adjust their own practices or adopt similar practices to make their performance more comparable.
Benchmarking can be done several ways. However, all benchmarking processes generally involve the following steps:
Step 1: Determine what specific business functions are not functioning at their optimal level and need to be monitored. This process will involve some research, which can be done by informally speaking with customers, other organizational members, suppliers, or managers, creating more formal focus groups with a representative sample of the aforementioned groups, sending out surveys, or analyzing market trends, and financial progress. This step is critical because it is important to have a deep knowledge of where the organization currently stands on the metrics the team is trying to improve.
Step 2: Identify the company or companies that have similar operations to your organization.
Step 3: Identify the company or companies that are top performers in the industry or outside of the industry. This can also include organizations outside of the country in which your company resides, which is highly recommended for global organizations. In order to determine which is the best company to examine, consider bringing in an external consultant, financial analyst, or business magazine.
Step 4: Administer surveys to targeted organizations in order to gain a better understanding of their processes and practices, as well as the measures that they use to gauge success. This information can be used to identify what alternatives there are to practices currently utilized at your organization.
Step 5: If possible, schedule a visit to the company identified as being the industry leader to witness and take note on the best practices in action. In order to acquire this information, it is advisable to reach an agreement with industry leaders over an exchange of information that is mutually beneficial to both parties. A meeting should be arranged so that this information can be disseminated to relevant parties.
Step 6: With the all of the acquired data and knowledge on the practices used to obtain excellent performance, consider ways to modify the practices that your organization currently uses or adopt new practices completely. Whatever method the team chooses, make sure concrete steps are taken to ensure these new practices are implemented. For example, identify market vacancies to pursue, obtain funding for whatever changes are going to be made, or obtain support for the proposed changes from senior management by exhibiting the benefit to be derived from enacting these changes.
Praxie's Online Benchmarking Tools & Templates
When a strategy team looks to compare an organization’s performance to another organization in the same industry or a similar area, the new online Benchmarking template from Praxie is key to ensuring that a like for like comparison is made. When developing a benchmark to track and compare one business against another it is important to review all of the most important metrics involved before making a decision. Although there are many tools and templates you can use to measure and benchmark a business, the most popular of these are performance benchmarking (tracking performance in a certain area), informal benchmarking (anecdotally comparing similar businesses), SWOT analysis and best-practices benchmarking.
Ultimately, the core feature of the Benchmarking tool is that it enables clear comparison between bodies based on a standard metric. Get started with our Benchmarking template.
How to use it:
- Enter the organizations you will benchmark in the left column.
- List the core features or attributes that are most important to you to benchmark across the top.
- Take notes for each feature for each organization and score the feature based on the organization’s overall capability.
- The overall benchmark score will calculate and indicate which organization(s) are at the top of their class related to the benchmarked features.
Unlike most traditional best practices Benchmarking techniques, Praxie’s online Benchmarking collaboration tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.