Benchmarking Types and Stages

What is Benchmarking?
Benchmarking is a process or system which allows the comparison of performances between businesses that will produce results or recommendations for improvement to that business. Benchmarking is a valuable process for any business and it needs to be part of the ongoing planning for success of any business.

What are the Stages in Benchmarking?
There are normally 4 stages to benchmarking:

  1. Gathering together information.
  2. Comparing the results of that information.
  3. Analysing the information fully.
  4. Implementing strategies to improve.

1. Gathering Information

Benchmarking can assist in the improvement of any business. Benchmarking allows the gathering together of information relating to your business and then measuring that against the results achieved by similar businesses in the marketplace. This results in identifying areas where your business can improve its performance by strengthening its weaknesses and utilising its strengths more. The factual information extracted is easy enough to put together, but there are also other areas, such as customer reaction and satisfaction that are more difficult to gauge or record. In any case, the gathering together of information is the most important first stage of benchmarking.

2. Comparing the Information

The data gathered is of no use unless there is a person with experience, able to understand the figures and other data generated. There must be a company or personnel with experience, who can look at the information and make sensible comparisons with the results achieved by other businesses. Where there is comparison of database, it is necessary to have knowledge of how to profile your business, especially if you have more than one product or service line.

3. Analysing Information

As your business grows and becomes more comfortable with using benchmarking techniques, you will need to learn how to analyse the data. Analysis is far more than just crunching numbers. It involves looking at the variation between your results and the standard results achieved by others in the industry, and then coming to conclusions that will enable the improvement in your operation, as well as your profits. Analysing the trends and understanding these areas is important.

4. Implementing Action to Improve

When the benchmarking techniques produce results from your analysis, your business will then have to make a conscious decision of how to bring about the improvement suggested by its conclusions. The information is only a study and it is not strictly benchmarking until you have implemented any changes to your current and past business programmes to achieve more competitiveness and higher growth.