Benchmarking refers to the practices that exist to measure the quality of the product, the performance and the growth of an organization. The company can do internal benchmarking by retrieving and analyzing old data or external benchmarking of other companies by examining other organizations' procedures and processes. Comparing your business progress against other organizations can help to have a roadmap for the betterment of a company, generate new ideas and insight for an organization to remain ahead of others. The organization can achieve its objectives by cutting down its costs while boosting efficiency and generating more revenue. An organization can use benchmarking to test various areas of its operations that exits both internally and externally.
Importance of Benchmarking
Benchmarking is not a single day activity; it’s a continuous process. For an organization to benefit from it should constantly engage in measuring their actions to ensure they are heading in the rights directions of achieving their objectives' business. Frequent use of benchmarking has various advantages that those who do not practice benchmarking the best-in-class metrics. The following are advantages of benchmarking by an organization; Benchmarking plays a significant role in optimization the companies position in the market and wins the targeted audience (Cobb & Kroes Li, 2020). Further, benching marking is critical in improving the organization's performance through efficiency. For instance, a reduction in companies waste process, either capital wise or time spend, will help normalize the operations and accrue more revenue.
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Best-In-Class Metrics for Benchmarking
Various multibillion-dollar companies like Apple and Google have adopted the best-in-class metrics from Microsoft, making them more profitable than other internet business companies (Kärnä & Junnonen, 2016). The companies have niched out specifics to achieve superior results. Some of the best-in-class metrics adopted by many companies include; goal metrics, KPIs, Qualitative and quantitative metrics and actionable metrics, informational metrics. With all these metrics in place, an organization can obtain a meaningful measurement, and hence calculations applied to direct and manage the business.
Case scenario of a Manager Benchmarking
As a manager, for my organization to realize high revenue and cut down on the operation cost, I will benchmark from my competitor's by adhering to the following process for effective benchmarking;
Deciding on the subject or goals to benchmark : -through engaging other stakeholders within an organization to decide on a process that tares ideal for our organization's success.
Researching and deciding on the organization to benchmark from : These involve a thorough analysis of whether the company needs internal benchmarking or there is a need for competitor analysis. Researching various organization and getting the required data about my selected organization.
Mapping and documenting all the necessary current process: - these entails consolidating all the required process into one focal place to enable easier identification of areas that need adjustments.
Collecting and analyzing the data from multiple sources : -this stage is critical as collecting the data from competitor be challenging due to privacy and confidentiality of information.
Measuring the performance against the data I have collected : I will analyze the complete data and compare it with my process's analysis metrics. I will also examine the factors that result in a gap between my organization and my competitors.
Create then a plan to effect the changes I considered most effective to bridge the performance gap . This includes listing all the company's objectives while following its culture to reduce the tendencies of pushback from my employees.
Lastly, I will implement and repeat the entire process : - doing close follow-ups on the changes and performance of employees in my organization. I will identify the new areas that are not working for them and provide solutions to make sure my employees understand their jobs well.
Conclusion
Benchmarking helps in continuous improvement in the daily operations of an organization. When a company benchmark its process and procures against internal against its competitor, performing a deeper analysis of the old data will indicate what will work and what will not work for the company. Analyzing the trends and past activities will enable a business to identify the patterns that will improve an organization's performance and eliminate the policies that do not work. On the other hand, learning from a competitor will result in adopting the practices that make them successful and avoid the procedures that likely to chase away the customers.
References
Cobb, J., & Kroes Li, K. (2020). Benchmarking Accessibility: Understanding Metrics and Opportunities. https://doi.org/10.26226/morressier.5f5a04c62c3338b5c13cd054
Erdil, A., & Erbıyık, H. (2019). The Importance of Benchmarking for the Management of the Firm: Evaluating the Relation between Total Quality Management and Benchmarking. Procedia Computer Science , 158 , 705–714. https://doi.org/10.1016/j.procs.2019.09.106
Kärnä, S., & Junnonen, J.-M. (2016). Benchmarking construction industry, company and project performance by participants’ evaluation. Benchmarking: An International Journal , 23 (7), 2092–2108. https://doi.org/10.1108/bij-05-2015-0050
