What is Benchmarking?

A Benchmark is a standard used for measurement purposes. The objective of benchmarking is to compare similar variables, i.e., performance of a product or service. The goal of benchmarking is to help organizations understand how to continuously adapt their processes to remain competitive in the industry by spelling SUCCESS (Sustained Understanding Common Critical Exceptional Strategies). Organizations use benchmarks to develop new and improved strategies. Benchmarking as an activity relies heavily on LL and evaluation.

Belshaw, Citrin and Stewart (2001) say that benchmarking is an attempt to compare one organization that has demonstrated a best practice against another. This definition is particularly applicable to industry benchmarking or best-in-class benchmarking depending upon the context. Damelio (1995) defines benchmarking as “an improvement process used to discover and incorporate best practices into your operation.” Damelio (1995) explains that what makes a better practice than another depends on the criteria used to evaluate the practice.

Coers, Gardner, Higgins, and Raybourn (2001) state that benchmarking is “the process of comparing and measuring your organization against others, anywhere in the world, to gain information on philosophies, practices, and measures that will help your organization take action to improve its performance.” Mulcahy (2005) maintains, “benchmarking involves looking at past projects to determine ideas for improvement on the current project and to provide a basis to use in measurement of quality performance.”

Benchmarking may be conducted internally or externally. Internal benchmarking is conducted between various and may include analyzing processes. External benchmarking occurs between organizations and may include analyzing services. Benchmarking may be performed quantitatively, qualitatively or mixed-method:
  • Quantitative benchmarks might focus on number of items produced
  • Qualitative benchmarks might focus on quality of items produced
  • Mixed method benchmarks might focus on number of top quality items produced
Reider (2000) states benchmarking practices are directed towards the continuous pursuit of improvement, excellence in all activities and the effective use of best practices. There are a number of ways this can be accomplished (Bogan and English, 1994. A common approach is to:
  • Begin with the identification of values and criteria before conducting a benchmark.
  • Next, the values and criteria are defined in a project plan.
  • A measurement approach is determined, which most closely depicts the evaluand.An organization needs to determine the best approach for benchmarking, but may want to consider the following categories as a starting point:
    • Internal: groups, teams, departments or divisions within the same organization
    • External: other organizations, associations, institutions, companies, agencies, etc.
    • Industry: offering a similar product or service
    • Role/Function: looking at the same job or responsibility
    • Process: Reviewing similar activities or procedures performed (macro-level)
Choosing a Measurement Approach
An organization must choose which approach they will use to support comparison so they can develop benchmarks. This involves the use of a basic measurement system that dictates how things will be evaluated. For example, if the procurement department is trying to analyze vendor performance, they will need to choose one of the three methods listed below:
  • Grading: assigning A, B, C, D, F letter grades. Respectively, the letter “A” represents superior performance and “F” representing failing performance.
  • Rating: judging something in terms of quantity or quality. Three to five point scales are typically used, i.e., poor, fair, good and excellent.
  • Ranking: rank ordering involves placing items in a particular order based upon relative importance or achievement. Ranking can be relative, i.e., 1st, 2nd and 3rd place.

In the above example, if the organization chooses Rating for vendor evaluations, checklists must be developed.

Emerging Best Practices and LL
Some emerging examples of best practices regarding LL include:
  • Development of Good Business Practices Documentation
  • SURE BET (Smart Useful Realistic Essential Beneficial Evaluation Templates) - See PERK (Project Evaluation Resource Kit) under LL Project Documentation
  • Adaptive search engines
  • Multimedia LL record, i.e., video presentation