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Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost. In the process of benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compare the results and processes of those studied (the "targets") to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful.
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. Benchmarking is used to measure performance using a specific indicator (cost per unit of measure, productivity per unit of measure, cycle time of x per unit of measure or defects per unit of measure) resulting in a metric of performance that is then compared to others.
Also referred to as "best practice benchmarking" or "process benchmarking", this process is used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.
 Benefits and use
In 2008, a comprehensive survey  on benchmarking was commissioned by The Global Benchmarking Network, a network of benchmarking centers representing 22 countries. Over 450 organizations responded from over 40 countries. The results showed that:
1. Mission and Vision Statements and Customer (Client) Surveys are the most used (by 77% of organizations of 20 improvement tools, followed by SWOT analysis(72%), and Informal Benchmarking (68%). Performance Benchmarking was used by 49% and Best Practice Benchmarking by 39%. 2. The tools that are likely to increase in popularity the most over the next three years are Performance Benchmarking, Informal Benchmarking, SWOT, and Best Practice Benchmarking. Over 60% of organizations that are not currently using these tools indicated they are likely to use them in the next three years.
 Collaborative benchmarking
Benchmarking, originally described as a formal process by Rank Xerox, is usually carried out by individual companies. Sometimes it may be carried out collaboratively by groups of companies (e.g. subsidiaries of a multinational in different countries). One example is that of the Dutch municipally-owned water supply companies, which have carried out a voluntary collaborative benchmarking process since 1997 through their industry association. Another example is the UK construction industry which has carried out benchmarking since the late 1990s again through its industry association and with financial support from the UK Government.  Procedure
There is no single benchmarking process that has been universally adopted. The wide appeal and acceptance of benchmarking has led to the emergence of various benchmarking methodologies. One seminal book on benchmarking is Boxwell's Benchmarking for Competitive Advantage (1994). The first book on benchmarking, written and published by Kaiser Associates, is a practical guide and offers a 7-step approach. Robert Camp (who wrote one of the earliest books on benchmarking in 1989) developed a 12-stage approach to benchmarking.
They include: informal conversations with customers. exploratory research techniques such as focus groups. or financial ratio analysis. Review and recalibrate The following is an example of a typical benchmarking methodology: 1. Before embarking on comparison with other organizations it is essential that you know your own organization's function. quality control variance reports. Collect data and select partners 6. process mapping. Target future performance 9. Determine the gap 7.Because benchmarking can be applied to any business process or function. employees. Identify data sources 5. base lining performance provides a point against which improvement effort can be measured. or in-depth marketing research. . Define the process 3. or suppliers. Identify potential partners 4. surveys.The 12 stage methodology consists of: 1. Implement 12. Establish process differences 8. processes. a range of research techniques may be required. Communicate 10. Select subject 2. quantitative research. reengineering analysis. Identify your problem areas . Adjust goal 11. questionnaires.
and magazines to determine which companies are worthy of study. funding the project and selling the ideas to the organization for the purpose of gaining demonstrated value from the process. suppliers. 3. visits. These could include air traffic control. Consult customers.This includes hotel rooms. Identify organizations that are leaders in these areas . Surveys are typically masked to protect confidential data by neutral associations and consultants.Look for the very best in any industry and in any country. a token gift.For instance if one were interested in improving hand offs in addiction treatment he/she would try to identify other fields that also have hand off challenges. cell phone switching between towers. and lost labor time. Implement new and improved business practices . meals.  Costs The three main types of costs in benchmarking are: * Visit Costs .Companies target specific business processes using detailed surveys of measures and practices used to identify business process alternatives and leading companies.Members of the benchmarking team will be investing time in researching problems. 4. travel costs. trade associations. Identify other industries that have similar processes . 6.2.Take the leading edge practices and develop implementation plans which include identification of specific opportunities. Survey companies for measures and practices . Visit the "best practice" companies to identify leading edge practices Companies typically agree to mutually exchange information beneficial to all parties in a benchmarking group and share the results within the group. * Time Costs . 5. transfer of patients from surgery to recovery rooms. and . finding exceptional companies to study. financial analysts.
* Benchmarking Database Costs . Activity analysis will be required where the objective is to benchmark cost and efficiency. Outsourcing has enabled a drastic decrease in costs for each company (by cost sharing) and the development of efficient tools (standards. This will take them away from their regular tasks for part of each day so additional staff might be required. at minimal cost. .implementation. business sectors and countries to make the benchmarking process much quicker and cheaper.Organizations that institutionalize benchmarking into their daily procedures find it is useful to create and maintain a database of best practices and the companies associated with each best practice now. Such analyses were initially carried out in-house by car makers and their suppliers.  Technical/product benchmarking The technique initially used to compare existing corporate strategies with a view to achieving the best possible performance in new situations (see above). However. These aim to capture benchmarks and best practices from organizations. has recently been extended to the comparison of technical products. they are increasingly being outsourced to companies who specialize in this area. by applying the best technologies available worldwide. as these analyses are expensive. Data is obtained by fully disassembling existing cars and their systems. increasingly applied to back-office processes where outsourcing may be a consideration. Its use is well-developed within the automotive industry ("automotive benchmarking"). This process is usually referred to as "technical benchmarking" or "product benchmarking". where it is vital to design products that match precise user expectations.the initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms.  Types * Process benchmarking . software). The cost of benchmarking can substantially be reduced through utilizing the many internet resources that have sprung up over the last few years.
allows the initiator firm to assess their competitive position by comparing products and services with those of target firms. This type is usually not industry specific. Benchmarking may be internal between entities within a single organization.external between competing entities.subject to confidentiality restrictions .extending the benchmarking universe to also compare to peer companies that can be considered alternative investment opportunities from the perspective of an investor. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses.involves observing how others compete. Finance and Accounting and Information and Communication Technology are unlikely to be directly comparable in cost and efficiency terms and may need to be disaggregated into processes to make valid comparison. * Best-in-class benchmarking .process of collecting. or .the process of designing new products or upgrades to current ones. Complex functions such as Human Resources.embraces everything from staffing and productivity to office flow and analysis of procedures performed.  Tools .involves studying the leading competitor or the company that best carries out a specific function.a company will focus its benchmarking on a single function to improve the operation of that particular function.performing a financial analysis and comparing the results in an effort to assess your overall competitiveness and productivity. * Operational benchmarking . buildings or companies. * Product benchmarking . * Benchmarking from an investor perspective. analysing and relating energy performance data of comparable activities with the purpose of evaluating and comparing performance between or within entities.* Financial benchmarking . Entities can include processes. meaning it is best to look at other industries. * Strategic benchmarking . * Performance benchmarking . * Functional benchmarking . * Energy benchmarking .
Regression analysis estimates what the average firm should be able to achieve. Definitions may also change over time within the same organization due to changes in leadership and priorities. Such benchmarking studies are used to create yardstick comparisons. DEA estimates the cost level an efficient firm should be able to achieve in a particular market. Bench marking Definition . have been utilized to identify high performers and weak performers in a number of industries. DEA can be used to reward companies/operators whose costs are near the efficient frontier with additional profits. including applications to schools. allowing outsiders to evaluate the performance of operators in an industry. A variety of advanced statistical techniques. including stochastic frontier analysis. Such tools support different types of benchmarking (see above) and can reduce the above costs significantly. and electric utilities. Software packages can extend the concept of benchmarking and competitive analysis by allowing individuals to handle such large and complex amounts or strategies. One of the biggest challenges for metric benchmarking is the variety of metric definitions used among different companies and/or divisions. hospitals. With regression analysis firms that performed better than average can be rewarded while firms that performed worse than average can be penalized. The most useful comparisons can be made when metrics definitions are common between compared units and do not change over time so improvements can be verified.Benchmarking software can be used to organize large and complex amounts of information. In infrastructure regulation. The two most common forms of quantitative analysis used in metric benchmarking are data envelope analysis (DEA) and regression analysis. water utilities.  Metric benchmarking Another approach to making comparisons involves using more aggregative cost or production information to identify strong and weak performing units.
The objective of benchmarking is to understand and evaluate the current position of a business or organisation in relation to "best practice" and to identify areas and means of performance improvement. region or country) to examine how others achieve their performance levels and to understand the processes they use. In this way benchmarking helps explain the processes behind excellent performance. The search for "best practice" can taker place both inside a particular industry. and also in other industries (for example .are there lessons to be learned from other industries?). they facilitate improved performance in critical functions within an organisation or in key areas of the business environment. organisation. industry. When the lessons learnt from a benchmarking exercise are applied appropriately.Benchmarking is the process of identifying "best practice" in relation to both products (including) and the processes by which those products are created and delivered. The Benchmarking Process Benchmarking involves looking outward (outside a particular business. Application of benchmarking involves four key steps: (1) Understand in detail existing business processes (2) Analyse the business processes of others (3) Compare own business performance with that of others analysed .
Performance or Competitive Benchmarking Businesses consider their position in relation to performance characteristics of key products and services. It involves considering high level aspects such as core competencies. it must become an ongoing. Changes resulting from this type of benchmarking may be difficult to implement and take a long time to materialize Purposes Re-Performance or Competitive Benchmarkingaligning business strategies that have become inappropriate 2. Types of Benchmarking There are a number of different types of benchmarking.(4) Implement the steps necessary to close the performance gap Benchmarking should not be considered a one-off exercise. This type of analysis is often undertaken through trade associations or third parties to protect confidentiality. as summarised below: Type Strategic Benchmarking Where businesses need to improve overall performance by examining the long-term strategies and general approaches that have enabled highperformers to succeed. To be effective. Benchmarking partners are drawn from the same sector. developing new products and services and improving capabilities for dealing with changes in the external environment. purposes: . integral part of an ongoing improvement process with the goal of keeping abreast of ever-improving best practice.
Process benchmarking invariably involves producing process maps to facilitate comparison and analysis. standardised data is often readily available. This sort of benchmarking can lead to innovation and dramatic improvementsAchieving improvements in key processes to obtain quick benefits 4. and. . Businesses look to benchmark with partners drawn from different business sectors or areas of activity to find ways of improving similar functions or work processes. 5. The main advantages of internal benchmarking are that access to sensitive data and information is easier. business units in different countries).g.Assessing relative level of performance in key areas or activities in comparison with others in the same sector and finding ways of closing gaps in performance 3. Process Benchmarking Focuses on improving specific critical processes and operations. Benchmarking partners are sought from best practice organisations that perform similar work or deliver similar services. This type of benchmarking often results in short term benefits. usually less time and resources are needed. Internal Benchmarking Involves benchmarking businesses or operations from within the same organisation (e. Functional Benchmarking Businesses look to benchmark with partners drawn from different business sectors or areas of activity to find ways of improving similar functions or work processes. This sort of benchmarking can lead to innovation and dramatic improvements purposes Improving activities or services for which counterparts do not exist.
International Benchmarking Best practitioners are identified and analysed elsewhere in the world. External benchmarking provides opportunities of learning from those who are at the "leading edge". However. Globalisation and advances in information technology are increasing opportunities for international projects. throughout the organization 6.There may be fewer barriers to implementation as practices may be relatively easy to transfer across the same organisation. real innovation may be lacking and best in class performance is more likely to be found through external benchmarking. This type of benchmarking can take up significant time and resource to ensure the comparability of data and information. However. purposes Several business units within the same organisation exemplify good practice and management want to spread this expertise quickly. these can take more time and resources to set up and implement and the results may need careful analysis due to national differences purposes . External Benchmarking Involves analysing outside organisations that are known to be best in class. perhaps because there are too few benchmarking partners within the same country to produce valid results. the credibility of the findings and the development of sound recommendations purposes Where examples of good practices can be found in other organisations and there is a lack of good practices within internal business units 7.
If a customer asks "What is the MTBF on your widget?" it is not enough to know that your Mean Time Between Failures is 120 hours on your standard widget and 150 for your deluxe widget. . What is Benchmarking Benchmarking is the process of determining who is the very best. Related Issues Once we decide what to benchmark. what objective measure would we use to compare Julius Caesar to Adolph Hitler. and how to measure it. and why? We do the same thing in business. like the example above.000 hours who do you think will get the order? What can I Benchmark Most of the early work in the area of benchmarking was done in manufacturing. If we were to benchmark "world conquest". You also have to know where your competitors stand.Where the aim is to achieve world class status or simply because there are insufficient"national" businesses against which to benchmark. you could argue that seven consecutive World Series Championships made the New York Yankees the benchmark. In baseball. Gengis Khan to Napoleon? Which of them was the epitome. If the company against whom you are competing for this order has a MTBF of 100 hours you are probably okay. the object is to figure out how the winner got to be the best and determine what we have to do to get there. The Fortune Magazine article "Beat the Budget and Astound your CFO" outlines how Rank Xerox even applied benchmarking to their sales effort. and what that standard is. Now benchmarking is a management tool that is being applied almost anywhere. who sets the standard. if their MTBF is 10. Who is the best sales organization? The most responsive customer service department? The leanest manufacturing operation? And how do we quantify that standard? Why Should I Benchmark If you don't know what the standard is you cannot compare yourself against it. However.
benchmarking is more focused and narrowly defined than competitive analysis. But analysts believe . and then implement improvements based on it. significance.Benchmarking is usually part of a larger effort. you will find yourself out of business. some observers contend that the dot-com emphasis on speed to market—while an essential component of overall business success—has led many businesses to give too little attention to examining revenue streams. Benchmarking is the practice of identifying. do not recognize any meaningful benefit from examining practices outside their own industries." Benchmarking relies on the study of general business practices that are not industry specific (generic benchmarking). Benchmarking is most often implemented by examining other organizations within the same industry. "They see no valid comparisons and. " stated Dodd and Turner. For example. and dimensions of benchmarking in the electronic business world." wrote James Dodd and Mark Turner in National Public Accountant. innovation. specific business or manufacturing functions (functional benchmarking). While it may involve learning from one's competitors. Competitive analysis can be used in conjunction with benchmarking to identify gaps and provide strategic direction. but it won't matter. benchmarking can be a valuable tool in increasing the health of any business." But many analysts believe that companies can learn from the experiences of enterprises from a wide range of industries. but you are just too busy. "but rather. Uncertainties still surround the utility. usually a Process Re-engineering or Quality Improvement initiative. When used effectively. understanding. Well if you don't benchmark. the benchmarking concept has also made an impact on the burgeoning world of ecommerce. and other web site activity data that might anable them to improve their practices and processes. "Most [small businesses] regard their businesses as too unique to warrant detailed comparison across industries. After all. site traffic. and financial success can be found every day in all types of businesses. Final Thoughts You know you need to benchmark. strategies in general (tactical benchmarking). The Westinghouse Quality Management System shows one way of fitting it all together. therefore. Then you'll have plenty of time to benchmark. however. general industry characteristics (industry benchmarking). and adapting the successful business practices and processes used by other companies (or even other departments within the same company) to increase your own business success. It is a business strategy that is used by manufacturers and service-oriented companies alike. In recent years. a tool that when used properly can produce …quantum leaps in company performance. "It is not an unnecssary cost to be avoided. new lessons in business efficiency. benchmarking itself measures specific performance gaps between a company and its competitors. or the numerical characteristics of specific products or processes (performance benchmarking).
etc. fear of the unknown." BARRIERS TO SUCCESSFUL BENCHMARKING Business experts point to several factors that can hinder a company's efforts to institute meaningful benchmarking practices. technology. perceived challenges to their abilities. . companies need to figure out how much those processes are costing them. Unwillingness or inability to accept the legitimacy of business ideas or practices from outside sources. Benchmarking programs can uncover many areas in which companies can improve their performance. Speed of in-house benchmarking processes. These include: Unexamined core business processes. The ultimate quality." wrote Tamara Wieder in Computer world. and these facets need to be taken into consideration when examining internal processes. Inadequate follow-up training. Effective benchmarking programs are given mandates to conduct their investigates in a timely manner. if owners and managers make it clear that benchmarking is not a faultfinding exercise but rather an established program to help the company grow and prosper in a fastchanging business world. "Once those core processes have been determined. A business should make sure that it has the resources (in terms of workforce. businesses can compare their cost structures to those of other companies and evaluate their own performance over time. Many employees and organizations are resistant to change. Resistance can be minimized. or funding) to both launch a thorough benchmarking program and implement its findings.. Inadequate people or technology resources. But if the company does not provide its work force with sufficient training to implement needed changes in a timely and effective fashion.that as more dot-coms establish a presence on the Internet. price. because of general contentedness. or reliability of the end product or service that is made available to customers is predicated on many aspects of a company's operations. based on that information. then the initiative becomes a waste of time and resources. so that improvements can be implemented quickly. however. benchmarking will grow in importance as a productive tool to measure web site activity as well as core business processes such as customer service and marketing. Then.
or the Internet to find the information. LEARNING FROM AWARD WINNERS Other ways to identify best practices include observing businesses as a consumer or a mystery shopper. The Malcolm Baldrige National Quality Award winners are a good group of companies to benchmark for best practices. Microsoft. and these more competitive business practices ensure a firm's survival or limit entry by new competitors. and share the information across industry segments. IDENTIFYING BEST PRACTICES Some firms are so well known for best practices in certain areas that it is not necessary to consult books. while the L. they allow companies to learn from others'attempts and to avoid costly and time-consuming duplication of efforts. industries.S. and maintainability of goods produced by American firms. practices have been implemented and developed that have brought the firm recognition in a certain area. changes to new processes. libraries. organizations that have shown achievements and improvements in seven areas: . and information on implementation as well as quantitative details and lessons learned. They believe that by sharing best practices. The benchmarking process sometimes helps a firm find documented strategies and tactics employed by highly admired companies. magazines. The term "benchmarking" is often used to describe this process of comparing practices or strategies to other companies. Federal Express is often cited as having best practices among competitors in the expedited small package industry for their on-time delivery and package tracking services. The Malcolm Baldrige National Quality Award is given to U. When a firm is benchmarking to learn about the best practices of others. reliability. Thus it is important to research and observe companies in a wide variety of settings. But due to industry forces or the firm's goal of excellence. For example. Typically the best practices result in a higher profit for the firm. often these superior methods are found in companies outside the firm's key industry segment.L." According to the consulting firm Best Practices LLC. the computer software developer. It is also possible to identify best practices by examining professional journals and business periodicals. Bean outdoor products and clothing company is frequently lauded for their customer service practices and return policy guarantees. This site has as its goal to increase the quality. and even in the not-for-profit arena to learn better ways to continuously improve. One way BMP accomplishes this goal is to identify best practices. Companies that win various awards often exhibit best practices to emulate.Service and manufacturing firms often evaluate their performance in relation to the performance of industry competitors. countries. Such practices are often referred to as "best practices. companies exhibiting a best practice may not be best-in-class in every area. They have met the rigorous award criteria and have had success that allowed them to win this prestigious award. Information on best practices and innovative technologies can also be found on the Best Manufacturing Practices (BMP) web site. Companies profiled have submitted abstracts of what their organization does well and they include previous practices. document them. is cited as being innovative and creative.
and other organizations in evaluating their own quality improvement efforts. etc. information and analysis. such as operational best practices. are usually those that are perceived to be the best performers in their class. benchmarking partners are classified into four (4) categories: 1) internal. human resource focus.leadership. The other organizations against which the comparisons are made. the criteria can be used by business. Benchmarking is a systematic process . known as 'benchmark partners'. compensation packages. Benchmarking must be performed on a specific area or activity only. 2) competitive. They later extended their coverage to include Europe's best plants. strategic planning. process management. Learning about the best practices of others is a valuable way for firms to gather fresh insights into possible methods of improving a myriad of aspects of their operations. Industry Week. and business results. and employee empowerment. distribution systems. The award highlights best practices by recognizing the achievements of those companies that improve the quality of their goods and services. factories.it must have a framework and use a standard set of attributes that are measurable to compare multiple organizations objectively. budgeting. governmental. The purpose of benchmarking is to identify and adopt best known practices that can lead to superior performance. customer and market focus. The publication stresses the fact that these practices can be implemented in a wide range of industries to improve competitiveness and productivity. and the like. has since 1990 set out to find and share stories of America's best plants. Benchmarking is the process of comparing an organization's operations and internal processes against those of other organizations within or outside its industry. industrial. lean manufacturing. It was a buzzword in the 80's and 90's. Limiting the scope of the benchmarking activity allows the formulation of a more focused agenda that provides more useful information from better-targeted benchmark partners. information technology. which pertains to direct competitors. but continues to be strongly practiced in various industries today. a publication aimed at manufacturers. It should be an important part of an organization's strategic planning activities. of the same company. Whether companies apply for the award or not. 3) . They have set out to define the best practices of world-class competition and highlight quality approaches. Winners of this national quality award have documented practices in the areas of quality and productivity as well as increased profits. which pertains to departments. staffing. In general.
There are many ways by which the benchmarking proper may be conducted with the benchmarking partner. since these are often willing enough to share information with an organization. . a good understanding of how an internal system works would facilitate understanding of those of the benchmark partners. which pertains to best-in-class organizations who are in the same field or activities. 4) discuss the questionnaire to clarify its objectives. 2) answer the questionnaire internally to test it and so that the same information may be provided reciprocally if the partner asks for it. For example. 2) define the purpose and objectives well. the following guidelines would be useful: 1) prepare for the visit thoroughly. considering which would give the most leverage or improvement potential. many companies or organizations are not big enough for internal benchmarking. which pertains to leading organizations from various fields and industries. There are other management techniques to accomplish these objectives. possibly on a visit to the partner. Benchmarking with internal partners is usually the best starting point for a benchmarking program. Benchmarking is just a tool to learn from others. and not a tool to win in business. functional or generic benchmarking partners involving worldclass non-competitor companies are viable options. 5) avoid being seen by the partner taking down notes. Benchmarking consists of five (5) basic steps: 1) decide on what process or area to benchmark. In such cases. and 4) generic. but one of the most popular ones is by exchanging information through a questionnaire. or how to generate more revenues and profits. 3) commit the questionnaire to memory and leave the hard copy behind. 4) be open and honest during the visit. 4) conduct the benchmarking activities arranged with the partners. 7) thank the partner again and again. If the visit to the benchmarking partner materializes. benchmarking per se is not useful unless knowledge gained from it are put in action to benefit the company. This may consist of the following steps: 1) develop a questionnaire that covers all the information that need to be obtained. 6) reciprocate information requests. and have to resort to external benchmark partners to get the information they need. It will not give information on what products and services customers want. and 5) analyze the benchmark data and adopt practices that will produce the greatest benefits to the organization. resulting in bench mark results that are empty of useful information. but this benchmarking arrangement is usually quite difficult to set up because most leading competitors will not divulge their 'trade secrets' to enable a competitor to catch up. and areas of confidentiality and sensitivity with the partner. areas of interest. it would be good to be able to benchmark against a leading competitor. 3) provide a reason for every question so that its necessity may be rationalized to the partner if necessary. and 5) arrange a visit with the partner. 2) understand the internal processes or operations involved in the area being benchmarked and collect data on their key performance metrics. but take down notes nonetheless. 3) identify organizations who are best in class in the area to be benchmarked and arrange mutually-beneficial benchmarking activities with them. Lastly. These must complement the regular use of benchmarking to ensure continuous improvement in everything that a company does. Identifying suitable external benchmarking partners depends on the purpose of the benchmarking activity as well as the nature of the benchmarking organization.functional. However.
. Benchmarks are also used to compare performance with other organisations and other sectors. explanatory context Benchmarking. in practice. the aim is to establish benchmarks through the process. 11–12).. which is rather closer to the concept of benchmark rather than the benchmarking process: Benchmarking: A term used to describe a standard against which comparisons can be made. and the simple generation of statistical data from a variety of sources which are then published as tables with no attempt at interpretation..Benchmarking core definition Benchmarking is a process that enables comparison of inputs. tends to be more about sharing good practice than undertaking formal comparative measurements. [and] Wragg in his description in Chapter 7 of the Commonwealth ‘Benchmarking Club’ sees one of the advantages of the cooperative methodology that was adopted in that approach as leading to “a true benchmarking process.. The Quality Assurance Agency for Higher Education (QAA) (undated) has a similarly terse definition.. However. statistical comparisons with some qualitative assessment of what the statistics mean. p. . Higher Education Funding Council for England (HEFCE ) (2010) defines benchmarking as: A process through which practices are analysed to provide a standard measurement ('benchmark') of effective performance within an organisation (such as a university). analytical review Campbell and Rozsnyai's (2002. for example. which can themselves be used in future to guide management in the quest for continuous improvement. the term is used in diverse ways: Massaro identities one aspect of the problem in that “the term is used fairly loosely to cover qualitative comparisons. processes or ouputs between institutions (or parts of institutions) or within a single institution over time. pp. ie in the absence of predetermined benchmarks. . 131) definition is: Benchmarking: Setting levels against which quality is measured or a process of identifying and learning from good practice in other organizations. According to Schofield (1998. the term has a wide range of meanings especially in the higher education context.
diagnosing problems in performance. national and international reference points. (Vlãsceanu et al. – an on-going. – a method of teaching an institution how to improve. with a view to finding ways to improve current performance.. faculty. Education and Training (2008) defines benchmarking in a limited way: A standardised method for collecting and reporting critical operational data in a way that enables relevant comparison of the performances of different organisations or programmes. for the purposes of monitoring and improvement.European Commission. 2004. 26): Benchmarking: A process by which an institution. The UNESCO definition of benchmarking is: A standardized method for collecting and reporting critical operational data in a way that enables relevant comparisons among the performances of different organizations or programmes. – a self-improvement tool (a quality management/quality assurance tool) allowing organizations (programmes) to compare themselves with others regarding some aspects of performance. Benchmarking is also defined as: – a diagnostic instrument (an aid to judgments on quality). or any other relevant unit evaluates and compares itself in chosen areas against internal and external. – an open and collaborative evaluation of services and processes with the aim of learning from good practices. Benchmarking gives the organization (or the programme) the external references and the best practices on which to base its evaluation and to design its working processes. usually with a view to establishing good practice. p. p. systematically oriented process of continuously comparing and measuring the work processes of one organization with those of others by bringing an external focus on internal activities. often with a view to establishing good practice. .g. For HEQC (2004. 25) For AEC (2004) benchmarking is more restricted and quite specific: A process by which standards are set in terms of levels of challenge and typical content for a given award (e. a Bachelor degree in music). programme. and identifying areas of strength. school.
a business will use benchmarking to review smaller processes or a large division. such as process or performance.. a learning process structured so as to enable those engaging in the process to compare their services-activities-processes-products-results in order to identify their comparative strengths and weaknesses as a basis for selfimprovement and/or self-regulation.' They add that benchmarking is: '. The Facts o Benchmarking takes broad segments of a company's operations and breaks them down in to small. understanding why they are better or smarter.' The Working Group embraced this definition.a process to facilitate the systematic comparison and evaluation of practice. businesses will discover deficiencies quickly and determine how to correct them. it is one part of company's strategic management process to ensure industry competitiveness. the Group defined benchmarking as identifying. Benchmarking measures the effectiveness of business processes compared to industry standards. and set about actioning this. Some examples of financial benchmarks include: Does the company spend above industry average for rent and utilities? How does the cost of materials compare to the industry? Are employee salaries and benefits competitive with the rest of the industry? . While benchmarking takes time and detail to implement.What do we mean by 'benchmarking'? Jackson and Lund (2000) suggested a working definition for benchmarking in UK higher education which encompasses both development and accountability: '. particularly the emphasis upon learning from the process. considering. In order to measure effectiveness.. better and smarter' ways of doing things and in the process of discovery.. process and performance to aid improvement and regulation. in turn. By starting with the small processes. because it measures the effectiveness of money spent on operations. this will make the entire division more competitive. complete processes that can be measured for overall effectiveness. While there are several forms of benchmarking. In the context of its work. Strategic Management o Strategic management is the implementation and evaluation of certain goals or objectives a business wants to achieve. It is a classic management tool that companies use to determine the profitability of their products and services. Benchmarking offers a way of not only doing the same things better but of discovering 'new. comparing and learning from developing practice in Scotland and internationally. Financial Benchmarks o Financial benchmarking examines monetary processes within business division to determine their industry competitiveness.first and foremost.. financial benchmarking is probably the relevant.
Ratios should be tracked regularly to determine where fluctuations occur and what drives these differences. Another advantage of benchmarking is that it begins with smaller processes. Additionally. specific benchmark goals do not exist.In addition. once problems are identified. and can be rendered completely ineffective if done improperly. Measuring the financial strengths and weaknesses of a divisional process gives management a clear picture of whether goals have been achieved. . this could mean figuring the ratio of sales of notebooks to desktop PCs against the benchmarks of industry peers. they may be easier to change than an entire division process. finite process is time-consuming and labor-intensive. financial ratios are helpful when reviewing divisions for effectiveness. Refining benchmarks is a managerial process that must occur to ensure bad measurements are not being taken of division processes. Benchmark Disadvantages o Benchmarking is a very detailed process. For example. Benchmark Advantages o Benchmarking provides quantitative results for business processes. breaking down divisions into a small. Benchmarking is also a continuous process that must be reviewed often to ensure that the information being gathered is still useful to the company. A company must use benchmarks to determine if it is competitive to rivals and within industry standards.
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