The A-Zs of Hiring Glossary


What Is Benchmarking?

Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests or best practices from other companies. It is a way to identify areas for improvement and to determine how well a company is performing compared to its competitors.

The process of benchmarking involves identifying the key performance indicators (KPIs) of a company’s business processes, selecting a benchmarking partner, collecting data on the partner’s performance, analyzing the data, and implementing changes to improve the company’s performance.

Benchmarking can be used for a variety of purposes, such as improving customer satisfaction, reducing costs, increasing efficiency, and improving product quality.

Some common types of benchmarking include internal benchmarking (comparing performance within a company), competitive benchmarking (comparing performance against direct competitors), and functional benchmarking (comparing performance against companies in different industries).

Why is benchmarking important?

Benchmarking is important because it allows businesses to compare their performance against industry standards and identify areas where they can improve. By measuring their own performance against that of their competitors, businesses can identify best practices and implement changes that lead to increased efficiency and profitability.

What are the different types of benchmarking?

There are several types of benchmarking, including internal benchmarking (comparing performance within the same organization), competitive benchmarking (comparing performance against direct competitors), functional benchmarking (comparing performance against organizations in different industries but with similar functions), and generic benchmarking (comparing performance against organizations in different industries).

Dos And Donts of Benchmarking


  • Define clear objectives and metrics to measure success
  • Choose appropriate benchmarks that align with your objectives
  • Collect accurate and reliable data
  • Compare apples-to-apples by ensuring consistency in data collection methods
  • Regularly review and update benchmarks to ensure relevance


  • Don’t rely solely on industry benchmarks without considering your unique circumstances
  • Don’t make assumptions about causality without further investigation
  • Don’t overlook the limitations and potential biases of the benchmark data
  • Don’t be afraid to challenge the status quo and explore new benchmarks if needed
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