HR Glossary  >   Benchmarking


What is Benchmarking?

Benchmarking is a process wherein certain important and key parameters that drive an organization’s culture, or strategy are measured against the competitors to understand one’s position and take corrective actions to improve. A few of these parameters include customer service, salary benchmarking, employee satisfaction index, etc. For instance, outstanding customer service and satisfaction are benchmarks for all the executives working in a call center.


Frequently Asked Questions

Why is benchmarking important?

Benchmarking allows an organization, or management, to see how their team, company, or competitors are functioning. This will enable them to keep track of their weaknesses, identify barriers and bottlenecks, to improve methods from time to time.

How many types of benchmarking are there?

Benchmarking can be categorized into 4 types:

Internal: It is the standard for all the approaches and development processes happening in the organization. This helps analyze where the organization stands in marketing and sales as compared to the competitors.

External: It is defined as the standard for companies, departments, and teams that are outside the organization. With the help of these benchmarks, it is easy to compare the strategies and workflows of different companies. But it is mandated to take permission from other companies.

Performance: It states the benchmark for employee performance by gathering and analyzing quantitative data. Generally, many organizations use this as a first approach to determine gaps in performance. But before the analysis, the team should have certain KPIs and data records.

Practice: As compared to performance benchmarking, this one is the standard for analyzing qualitative inputs to see how a certain activity is performed through individuals, processes, and software. One can understand how the performance gaps occur in the system.

What are the different steps for benchmarking?

It can be performed using 4 steps as listed below.

  • Plan - Determine and prioritize needs.
  • Analyze - Examine possible gaps in the process.
  • Integrate - Set goals and targets
  • Action - Build plans, perform strategies, and identify output.

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