Why Benchmark? Understanding the Processes of Best Practice Benchmarking

Best practice benchmarking (benchmarking for short) generally refers to the pursuit by organizations of enhanced performance by learning from the successful practices of others. Comparisons of key processes which contribute to organizational success are made – with other parts of the same organization; competitors; or organizations operating comparable processes in a context which is in some way relevant. Benchmarking is a continuous activity, not a one-off project; internal processes are adjusted, performance is monitored, new comparisons are made with the current best performers and further changes are explored, all with the ultimate goal of achieving world class status. Benchmarking continues to grow in popularity in both private and public sector organizations – but does it always produce the desired outcomes? Although spectacular gains from benchmarking are claimed particularly in practitioner literature, there is also growing evidence of disappointment with the effectiveness of benchmarking. It can be very time-consuming to undertake and manage, and ensuring that sharing information with competitors is to the partner organizations' mutual advantage is often difficult. This paper reports on an ongoing research project at the Open University Business School, supported by the Chartered Institute of Management Accountants, aimed at understanding in depth the processes which are undertaken in organizations in the name of benchmarking. The project team are using a combination of postal questionnaires and developing case studies to identify the features of successful benchmarking practice, and also those characteristics of benchmarking organizations or benchmarking processes which are considered to be problematic. Issues such as the relationship between organizational size and level of benchmarking activity, the perceived costs and benefits of benchmarking to stakeholders, the factors which have led organizations to abandon benchmarking activities, the contribution which management accountants and other professionals can make to successful benchmarking, and the impact of benchmarking clubs, will all be explored through