Measure performance and set targets
Benchmark your business performance
Benchmarking is the process of comparing your business performance with other businesses, usually in the same industry. It helps you understand how well your business is performing and where you can improve.
What is benchmarking in performance management?
Benchmarking helps you identify best practices used by competitors or industry leaders. You can use this insight to improve your processes, increase efficiency and strengthen your business performance.
Key benchmarking questions
When benchmarking your business, ask:
- Who are the top performers in your industry?
- What makes them the best?
- What can you learn from them?
- What actions can you take to improve performance?
Benchmarking can be a one-off exercise or part of an ongoing performance management process.
Types of benchmarking
A benchmark shows the best level of performance achieved in a specific activity. Common types include:
- internal benchmarking - comparing teams, departments or sites within your business
- external benchmarking - comparing your business with competitors
- generic benchmarking - comparing similar processes across different industries
Focus on benchmarks linked to your key business drivers. These are often similar to your key performance indicators (KPIs).
Choose businesses to benchmark against
It is usually helpful to compare yourself against businesses in the same sector. The right comparison depends on your goals. For example:
- small businesses may compare against average industry performance
- high-growth businesses may compare against market leaders
See also competitor analysis.
Find benchmarking data
Finding reliable external data can be challenging. Useful sources include:
- market and competitor research
- trade associations with industry statistics
- commercial market reports - they offer great detail but can be costly
Use benchmarking to improve performance
You should use benchmarking data in the same way you use any other performance measurement data you generate - to improve how your business operates. Set clear business performance targets based on your findings. This helps you work towards industry standards and improve results.