Benchmark is the process of comparing the performance of business processes and metrics including cost, cycle time, productivity, or other qualities that are widely regarded as the industry standard benchmark or best practice. Basically, Benchmark provides a snapshot of the performance of your business and help you understand where you are in relation to a particular standard.

Type of Benchmark

• Process benchmarking – start a company that focused on the observation and investigation of business processes with the goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to compare the costs and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration.
• Financial benchmarking – financial analysis and comparing the results in an attempt to assess the overall competitiveness and productivity.
• Benchmarking from an investor perspective comparisons broaden the perspective of the universe to also compare with peer companies that can be considered as an alternative investment opportunities from the perspective of an investor.

• Performance benchmarking – allows the initiator firm to assess their competitive position by comparing products and services with those of the target company.
• Product benchmarking – the process of designing new products or upgrades to the current one. This process can sometimes involve reverse engineering taking apart competitors products to find strengths and weaknesses.
• Strategic benchmarking – involves observing how others compete. Type of industry is usually non-specific, meaning it is best to look at other industries.
• Functional benchmarking – a company will focus its benchmarking on a single function in order to improve the execution of certain functions. Complex functions such as Human Resources, Finance and Accounting and Information and Communication Technology are unlikely to directly compare the cost and efficiency terms and may need to be separated into the process to make a valid comparison.
• Best-in-class benchmarking – involves studying the leading competitor or a company that best perform a particular function.
• Operational benchmarking – embraces everything from staff and productivity to office flow and analysis of procedures performed.