Peer Benchmarking: A Brief Analysis
Peer benchmarking is a powerful management tool. To get a good grasp of this concept, let us break it down for you. First, what is benchmarking? Benchmarking is a process of comparing one...
First, what is benchmarking? Benchmarking is a process of comparing one’s business processes and performance metrics to industry bests or best practices from other industries.
Benchmarking involves management identifying the best firms in their industry, or any other industry where similar processes exist, and comparing the results and processes of the "targets" studied to one's own results and processes to learn how well the targets perform and, more importantly, how they do it. It also helps to break through resistance to change by demonstrating other methods of solving problems than the one currently used and demonstrating that they work, because they are being successfully used by others.
This process is used in management, particularly strategic management, in which organizations evaluate different aspects of their processes in relation to the best companies’ practice processes. This permits organizations to develop plans on how to make improvements or adapt specific best practices, normally with the aim of increasing some aspect of performance.
To assess their competitive positioning and better evaluate their performances, fundraising organizations need to view themselves through an external perspective—as one institution among a group of peers. This is where peer benchmarking comes in. Peer benchmarking is used when you want to increase your own performance to that of leading professionals in your field. It allows an institution to use objective data to answer important questions in comparison to peers. Here are key factors to benchmarking:
•Collaborative – Peer benchmarking is best done in a collaborative way.
•Comparing to the best – The aim is to learn from the best practices of the processes and circumstances they use to underpin their performance.
•Repeat periodically – This is to ensure that you are up to date with changing practices and circumstances.
•Integrity – Being honest and open is crucial to benchmarking success.
•Thorough analysis and action – If outside variables are to be considered, they should be part of a structured program subject to thorough analysis.
Benchmarking is moderately expensive, but most organizations find it more than pays for itself.
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