performance benchmarking

Many businesses find it difficult to see where they are going and become locked in the past. They are blindfolded. They judge today's performance by reference to yesterday's and are blind to the opportunities for innovation and improvement that surround them. Benchmarking is a way for them to remove the blindfold.

Benchmarking: the practice of being humble enough to admit that someone else is better at something and wise enough to try and learn how to match or even surpass them at it.

Performance is a relative measure. Think of a 100 metre sprint. Athlete judge their performance not simply by how quickly they complete the race, but by their relative performance (where they finished compared to other runners) and by reference to previous records (including their own).

Expectations of performance change over time: Jim Hines ran a ground breaking 9.95 seconds in 1968; a record that stood for 15 years; a time, though, that by today's standard of 9.78 looks slow. At a time that we judge performance in most aspects of our life by reference to benchmarks, why then do many businesses set their own goals without any reference to the outside world? Why do they continue to think of performance in absolute terms? How can a business judge its success - or otherwise - simply by reference to its own accounts? In short, it cannot.

Independent research undertaken on behalf of the DTI in the UK has demonstrated that 62% of businesses that use benchmarking report increased profitability and 48% report increased productivity. It is also shown to improve the client satisfaction levels of advisers undertaking benchmarking, and it can significantly add to an adviser's competence and confidence. Performance benchmarking allows businesses to compare their performance to that of others and to objectively assess their relative strengths and weaknesses, making causal links between practice and performance, i.e. what is working and what isn't.