What Is Benchmarking
It refers to a logical process of identifying and implementing the best practices of an organization’s internal processes. Though management experts say there are various benchmarking processes, usually there are two main. Formal benchmarking and informal benchmarking process. Whatever the type of benchmarking process uses it is there to help the organization to get into best practices of the industry.
The informal benchmarking is one that everybody uses in their daily life as well. Generally we all compare and learn from the practices that are followed by others. Example being a housewife who watches a cookery show tends to learn certain tips and puts them to use so that the in tastes the best. Not only this the following list helps us to understand informal benchmarking better:
- Between colleagues in an office who come for a coffee or tea break, they just talk about their experience. This is also a great place to learn and use the experience of others in selecting the best practice.
- For big organizations they may also consult business consultants just by phone call in getting their advice.
- One more kind of informal meeting is at seminars and conferences where people of other organizations also come.
- The internet has also become a mode of learning best practices which falls under informal benchmarking.
Coming to the formal benchmarking it is divided into two, one is performance benchmarking and the other the best practices benchmarking. Here in performance benchmarking it allows the comparison of performance of organizations for any given specific process. This information can later be used to identify opportunities either for improving or to set target of performance. Performance benchmarking involves in the comparison of financial measures, expenses, staff turnover rate, absenteeism etc.
On the other hand best practices benchmarking is that were the companies makes a research and study of high performing companies. Here also it compares for a given specific process. The result of such research and study is applied to the specific processes of the organization. Hence this method involves the whole process of data collection, comparison, analyzing and finally implementing.
There are certain challenges that are concerned with benchmarking, to name a few would be:
- There arises a difficulty in comparison
- Source constraints like time, finance and experts who can do them
- Employees may not cooperate in disclosing certain facts
- Difficulty in finding suitable partners for comparison.
The biggest mistake that every organization make is that they limit the benchmarking to their own industry. It is very well known how our own industry is performing; hence the company’s must reach out industries that are into similar processes. The advantage of benchmarking is that the firm comes to know who is performing well and also the best practices adopted within the organization.