External Benchmarking Definition
External benchmarking is the process of comparing an organization’s performance indicators to those of similar organizations in order to identify best practices and areas for improvement.
There are many different ways to go about conducting an external benchmarking analysis. The most important part is to ensure that you are comparing apples to apples, so to speak. That is, you want to compare organizations that are similar in terms of size, industry, geographic location, etc. Once you have a list of comparable organizations, you can start looking at specific performance indicators and compare them side by side.
Some common performance indicators that organizations use for benchmarking purposes include financial measures such as profitability or ROI, customer satisfaction rates, employee satisfaction rates, production levels, safety records, and so on. The goal is to identify which organization is performing better on each particular indicator and then try to understand why. Is there a best practice that the higher-performing organization is doing that you could implement in your own organization?
Conducting an external benchmarking analysis can be a very helpful exercise for any organization looking to improve its performance. It forces you to take a close look at how you measure up against your peers and identify areas where you could be doing better.
