Benchmarking: a story of best practices and success
All businesses are in a continuous search for processes and quality improvements that will eventually lead them to achieving a superior level of performance in their activity.
Benchmarking represents a very important methodology used to support significant business improvements, although it has not been, so far, explored to its full potential. Its methodological uniqueness is represented by the identification of those processes that lead to a superior performance, followed by the analysis of the facts behind that success.
An operational definition of benchmarking, as developed by specialists in the field, is “finding and implementing best practices.”
A benchmarking study provides several benefits, including a set of measures for assessing the performance of the project system and a baseline from which to measure improvements. It also offers the opportunity to compare an organization’s performance against industry competitors, noting strengths, weaknesses, and different ways of executing projects.
Moreover, through benchmarking, companies can elaborate proposals for improving the project system, monitor their organizational performance and see which of their competitors perform at the highest and lowest levels.
The term “benchmarking” has its origin in the 1970s, when it was first used for identifying a reference point from which other measurements can be made (a “benchmark”). Historically, benchmarking is based on tools like competitive advantage and Kaizen – continuous incremental improvement, or “change for the best”.
In the 1980s, several corporations, especially from the technological field, started introducing benchmarking as an organizational standard procedure. Prior to these, Xerox, which was the biggest copy machines manufacturer worldwide, implemented competitive benchmarking around the mid-1970’s, when the company experienced a complete revival. Xerox directly compared itself with best competitors on the market in order to determine what would be the best approach to increase its productivity, while decreasing costs.
Rank Xerox reworked business thinking through the benchmarking plan they have introduced. Robert C. Camp, Manager of Benchmarking Competency Quality and Customer Satisfaction at Xerox, developed a five-phase benchmarking process containing twelve main steps to be followed. Xerox soon became a world-class organization and the first company to winthe Malcolm Baldrige National Quality Award in 1989 and the European Quality Award in 1992.
Benchmarking is nowadays acknowledged as being a core component of the quality improvement methodology and it can be considered as the most important contribution to it after Deming’s or Juran’s foundations.
A benchmark is generally used for improving the organization’s processes, communication or for budgetary reasons.
The benchmarking process can be conducted in several ways. One option is to use benchmarking data taken from processes commonly used across an industry, or functional benchmarking data for various processes that exist in more industries. Another approach is related to internal benchmarking, that compares common activities across different divisions of the same organization.
Benchmarking plays a key role in helping organizations monitor their performance and deal with the policy process in their industry.
- Mann, R. (2011), Benchmarking in pursuit of performance excellence, Centre for Organizational Excellence Research
- QFinance (2014), What is benchmarking?, Performance Management Checklists
- Blakeman, J. (2002), Benchmarking: definitions and overview, University of Wisconsin-Milwaukee