We benchmark to identify gaps, drive improvement, and learn what high performing organizations are doing to achieve the standard. Benchmarking helps us be more competitive and it can provide the “why” for change or improvement to increase efficiencies and effectiveness.
- Gain an independent perspective about how well you perform compared to other organizations
- Drill into performance gaps to identify areas for improvement
- Enable a mindset and culture of continuous improvement
- Monitor organizational performance and manage change
- Develop a standardized set of processes and metrics
- Set performance expectations
INTERNAL & EXTERNAL BENCHMARKS
Internal benchmarking sets a standard that we strive to achieve. External benchmarking helps us know if we are aiming for the right standard. External benchmarking tells us how we compare to excellent organizations and the industry or accepted standard for our goals.
External benchmarking gives us the opportunity to relate not compare. From external benchmarks, we learn what other industries and professions consider best in class performance. For example, Southwest Airlines struggled to reduce the time necessary to deplane and board an airplane when at the gate. The leaders of Southwest did not study other airlines. Why not? No other airline had a best practice standard. Southwest turned to NASCAR pit crews. The outcome of this benchmarking study is reported to have helped Southwest change their gate maintenance, cleaning, and customer loading operations, and to have saved the airline millions of dollars per year.
Internal benchmarking is often used to improve performance in different departments. Department managers would be encouraged to study best practices in higher performing departments and implement changes as needed. This process may support changes for improvement throughout the organization. The question is always, “Is our highest performing department meeting or exceeding the industry standard?” This highlights the connection between internal and external benchmarking.
This benchmark report allows us to look at organizations we aspire to be like. By choosing organizations that are on the leading edge of our industry, we can identify best practices that help improve our organization. These benchmark organizations are recognized by a wide audience as being best in class.
This benchmark report allows us to look at organizations very similar to us. This helps ensure we are staying competitive with other like organizations.
This is a type of benchmarking report where we gather data by looking at strengths, weaknesses, opportunities, and threats to help understand our current climate. This type of data gathering and reporting can be done at regular intervals—mid-year or end of year.
This type of benchmarking is done with members of a group. Professional and collaborative associations collect information from members and provides benchmarking and best practice reports for the membership (e.g. The Association of Information Technology Professionals and The National Education Association).
BENCHMARKING IN PRACTICE
Before an organization can begin to consider benchmarking, either internal or external, the organization must have clear performance goals, SMART goals, or KPIs. Performance data must be available and trend data over time ensures a more accurate and rich picture of performance. Benchmarking is a rigorous, analytical process, yet it is pretty straightforward.
Consider the chart, outlining the process for the most effective use of benchmarking. This process reflects a continuous improvement approach. We review where we are now, current performance level, determine where we want to be in comparison to the best, and then decide the best practices that will be incorporated into practice to work toward improved performance. Once the practices are identified and incorporated, it is important to monitor strategy implementation and continue to modify practice for improved performance.