“ORGANIZATIONAL BEHAVIOUR

FIVE MINUTES CHALLENGE”

SUBMITTED BY

JOBIN RAJU
S2 MBA, SMBS

TOPIC - BENCHMARKING

SUBMITTED TO

DR. SIBY ZACHARIAS

ASST. PROFESSOR, SMBS

Master of Business Administration

School of Management and Business Studies
M.G. University, Kottayam
2019-2021

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 ORGANIZATION BEHAVIOUR

BENCHMARKING
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INTRODUCTION

Benchmarking – Improving ourselves by learning from others, the simplest definition that can
assign to benchmarking. It is a transformational process in which one can adaptively transform to
an upgraded level by comparing and adopting the best practices from the ahead competitors.

Benchmarking is the process of improving process by continuously identifying, understanding,

and adapting outstanding practices found inside and outside the organization. In this process
comparison with one’s business process and performance metrics to industry bests and best
practices from other industries. American Productivity and Quality Centre (1988) defines
Benchmarking as “It is the practice of being humble enough to admit that someone else is better at
something and wise enough to try how to match and even surpass them at it”.

What is Benchmarking?

Benchmarking is the continuous for and adaptation of significantly better practices that leads to
superior performance by investigating the performance and practices of other organizations. In
addition it can create a culture to facilitate the change process.

Japanese word DANTOTSU means striving to be the best of the best, captures the essence of
Benchmarking. Incorporating best practices can lead to greater efficiency and effectiveness and
happier customer. It means to measure the best practices of leading businesses, and learn and
adapt them for use in your business.

Features of Benchmarking:-

Benchmarking has various features that contribute a lot overall to the organization in terms of
growth, development of new divisions, new technology adaptations and many more.

 Good impact on customer needs – Feedback is always important for any organization. By
using various benchmarking
 Helps in raising company standards
 Betterment in learning methodologies:
 Get inspirations from the pioneers
 Strengthening the weakness
 Enhances the learning experience

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  Keeps in pace with new technology:

Background of Benchmarking

The term benchmarking was first used by cobblers to measure people’s feet for shoes. They
would place someone’s foot on a “bench” and mark it out to make the pattern for the shoes.
Traditionally, the organizations used to enhance their products and performance by focussing on
their activities. However, these traditional performance improvement trends seem not to be
sufficient for the highly competitive markets.

In other words external environment and market conditions change rapidly and the goal setting
which is internally focused can’t be true reflections of customer’s expectations. Customer
expectations are highly liquid and are driven by standards set by best performer. Any product or
service just below these standards may not catch the eyes of customer.

Why Benchmarking?

Survival lies in emulating best and not in lagging behind. Benchmarking is time and cost efficient
because it involves imitation and adaptation rather than pure invention. It prevents “Re-inventing
the wheel”

Benchmarking gives the chance of gaining:

1. Better Awareness of Ourselves (Us)

What are the company doing, How are we doing it, How well we are doing it
2. Better Awareness of the Best (Them)
What the best competitors doing, how they are accomplishing it and how well they are
completing it.

Types of Benchmarking

The benchmarking methods vary in many ways and are followed by different organizations
according to their need and financial abilities. Here are the few most common benchmarking
process followed. Totally, there are 4 types of benchmarking methods.

1. External benchmarking: It is a process of comparing the organizational methods and

performance with the other peers of the same industry.

2. Internal benchmarking: It is a process of comparing the various methods and performance

internally within the organization. In this internal benchmarking, the internal performances of
various departments across the varied locations in the organization are compared.

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3. Competitive benchmarking: In competitive benchmarking, your performance is compared
with direct competitors. Data collection is considered tough here but one can gain more inner
ideas about the competitor’s performance and its reasons.

4. Industry benchmarking: In this type of benchmarking, the comparison is made with the
leaders in the field. In this category, data collection can be considered tough and tedious but you
should know that you’re comparing with the leaders and pioneers in the business.

Three major benefits of Benchmarking

 Product and Process Improvement – By implementing benchmarking activity,

organizations can improve their operation process.
 Cost Reduction – It facilitates a reduction of operation costs
 Competitive Strategy – It helps the organization planning and implementing competitive
strategies. It provides an ability to compare and learn from the best practices in any
particular industry.

Future Use of Benchmarking

The future use of benchmarking as a strategic tool to compare and analyze business services or
products will help in the growth and progress of any organization which utilizes it.

Around 57% of small organizations and 47% of the medium organizations are planning to make
use of the benchmarking process. Overall the highest partitions are the larger organizations with
69% and the lowest are medium organizations with 46%.

Purpose of Benchmarking

The main purpose of benchmarking is to make the organization move with the market
expectations and also compete with the industry standards followed by various other
organizations. It does not only concentrate externally but it also works on various internal factors.

1. It analyzes and understands the organization’s existing working model.

2. It compares the organization’s working model with the peers of the organization.

3. Compares the various organizations working strategies with the successful other organization’s
working model.

4. Suggests the necessary steps to compete with the leaders in the market.

5. Compares the profit rate of the internal divisions to motivate the betterment in weaker divisions
of the organization.

Benchmarking as a Competitive Management Accounting Tool

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 Benchmarking is often used as a management tool in highly competitive industries, where the
only controllable way to improve margins is by cutting costs. It helps organisations that are
internally focused and have a pre-dominantly reactive approach towards competition to become
more proactive and externally oriented.

Benchmarking produces information that is valuable and relevant to managers, accountants, and
even researchers. Although most information did not contradict prevailing views, it is unlikely
that the results of each report could have been achieved as efficiently by any other technique,
given the easiness of the data and information required for a traditional quantitative approach.

CONCLUSION

Benchmarking is not a one day task or a result that can be produced once followed. It is a big
process that has to be followed regularly every single time once it is updated. No company or
organization has a fixed benchmark. It changes from time to time and it has to keenly follow to
get the result.

Even though it actively contributes to the welfare of the organization, its success depends upon
every single member of the organization. The strategy tool called benchmarking can be utilized to
make a comparison of business products and processes with various performances inside and
outside the business. Organizations need to follow the aspects and make perfect moves in order to
reach productivity and success by making a glimpse at other organizations.

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REFERENCES

1. Allan, C.F. (1993), Benchmarking practical aspects for information professionals, Special
Libraries, Vol. 84 No.3, pp.123-130
2. Reider R. (2002), “Internal benchmarking: how to be the best — and stay that way”, The Journal
of Corporate Accounting & Finance; Retrieved on March 2020; 13, 4; pp. 41-48
3. APQC (March 2017), Benchmarking for Organisational Design or transformation, retrieved on
March 2020, from https://www.apqc.org/

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