Topic No.27: THE CONCEPTS OF BENCHMARKING

What is Menchmarking:

Benchmarking is a process of comparing an organization's performance metrics, processes, or strategies against industry best practices or leading competitors to identify areas for improvement. It helps businesses understand where they stand relative to others and how they can enhance efficiency, productivity, and competitiveness.

Types of Benchmarking:

1. Internal Benchmarking – Comparing performance between different departments or teams within the same organization.

2. Competitive Benchmarking – Comparing against direct competitors in the same industry.

3. Functional (Generic) Benchmarking – Comparing processes with companies outside the industry that excel in similar functions (e.g., supply chain management).

4. Strategic Benchmarking – Analyzing long-term strategies of top-performing companies to gain a competitive edge.

5.  Performance Benchmarking – Measuring quantitative metrics like cost, time, quality, and customer satisfaction against industry standards.

The concept of benchmarking involves comparing our quality with that of other Organizations in the field of business, but is this always necessary? Can we compare against absolute criteria instead? That is, benchmarking against predefined quality standards we set ourselves.

The concept of benchmarking is flexible and can be applied in various ways, depending on an organization's objectives and context. Generally, benchmarking refers to the process of comparing an organization's performance or quality against standards or other organizations to drive improvement.

1. Is benchmarking against other universities (Competitive Benchmarking) always necessary?

o Not always, but it is a common approach because it helps identify strengths and weaknesses relative to competitors or peers in the same field.

o Pros: Helps understand one’s position in the market (e.g., university rankings, student satisfaction).

o Cons: If compared to inappropriate organizations, the data may not be useful.

2. Can benchmarking against Absolute Criteria (Standard/Generic Benchmarking) be done?

o Yes, absolutely. This involves setting predefined quality standards (e.g., international standards like AACSB for business schools or national education criteria).

o Pros:

§ Suitable if the university has a specific vision or goal (e.g., becoming a top-tier research university).

§ Not limited by competitors' capabilities.

o Cons: Must ensure the criteria are challenging and realistic.

3. Other Benchmarking Approaches to Consider:

o Internal Benchmarking: Comparing departments within the same organization (e.g., different faculties in the university).

o Functional Benchmarking: Comparing with organizations outside the sector but with similar processes (e.g., comparing a university’s IT system with a tech company’s).

4. Recommendations for Choosing the Right Approach:

o Combine both methods: Start with Absolute Criteria to assess internal readiness, then conduct Competitive Benchmarking to evaluate competitiveness.

o Example: A university might set a standard like "at least 50% of research publications must be in Q1 journals" (Absolute) and then compare with top 100 global universities to see how they achieve it (Competitive).

Conclusion: Benchmarking does not always require comparison with other organizations or other universities. Using Absolute Criteria can be effective if the standards are well-designed and ambitious. However, combining multiple approaches provides a more comprehensive perspective and supports sustainable improvement.