If a track athlete were to run the mile faster than any other athlete has ever run it, it would be considered a world record. If a businessman wanted to set a standard for a company, it would be considered a benchmark. The process of setting a standard, deciding who the best at a particular activity is, and determining what ‘the best’ means is all a part of setting a benchmark.
Benchmarks in a business setting can be the answer to questions such as:
Finding out the answer to questions such as these can be helpful within a business setting, but there is a process to establishing a benchmark.
Types of Benchmarks
There are three main forms of benchmarks: internal, competitive and strategic. Internal benchmarks allow a company evaluate their own performance and then use the results to demonstrate competence, best practices, etc. Competitive benchmarks are useful when a company is evaluating their performance on the basis of how they stack up with other businesses. Strategic benchmarks are useful to give guidance on direction and planning for the future of a company, based on the benchmark results.
To establish a benchmark, determine the area that will be evaluated. For that specific activity, establish what will be evaluated, the unit of measurement and the length of time the evaluation will take place. Once an evaluation has occurred, compile the information so that it is useable. The benchmark evaluation can be used for comparison purposes in the future, and can identify performance gaps where improvement can be made.
Benchmarks can be used within any industry, at any point in time and with any process or project, making it an attractive method of company measurement.