Bench marking is the process of comparing one’s business processes and performance metrics to industry best practices from other companies. This gives a business perspective on how they compare to their competitors and gives insights to how to better manage their operations/costs to remain competitive. This information can assist an organization in developing a sustainable business model at a lower cost. It also can give a business a “competitive advantage” over their local competition by providing insights into how businesses outside of the region conduct their business.
An example of bench marking includes comparing other businesses technological aspects to its own. As technology progresses there can be changes to processes and controls that can make staying current a daunting task for a business owner. These changes can impact company’s “best practices” and yield a higher level of service to a customer at a lower cost. If a business does not adapt to beneficial changes, they will soon find themselves offering a product of lower value than the competition or one that costs more to produce, thereby losing their competitive edge.
An internal example is reducing employee turnover by bench marking employee compensation (including things like benefits and training). Employee turnover is not only costly, it can have an impact on customer satisfaction and the customers’ perception of a business. Every business owner and manager knows how crucial this can be to limit compensation in order to control costs and remain competitive in the customer marketplace, while still providing employees with fair compensation. Training and scheduling is another important factor to ensure quality of products and services. Other businesses may incorporate certain training or scheduling functions that can lead both to employee satisfaction as well as higher customer service. If business are not staying abreast of these items as they compare to others they will find themselves left behind.
Bench marking can be a very valuable aspect of a business’s functionality. It is well worth the time and efforts to review these on a quarterly basis. Companies should look beyond their local market for this information and find other regions to analyze. They may find the “one new thing” that has proven success and sets their business in position for improved customer service and profitability. The price for bench marking will be far less than the cost of falling behind.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:
