It can help you identify gaps, strengths, and opportunities for improvement in your key performance indicators (KPIs). However, benchmarking also has some potential drawbacks, such as losing your competitive edge, copying ineffective practices, or neglecting your own innovation and differentiation..
What are the problems with benchmarking?
In most cases, the benchmark data being compared is stripped of its short-term and long-term context, meaning it tells you what a competitor or internal team has achieved, with no information on how they achieved it. This makes it difficult to pinpoint meaningful areas for improvement..
Which is a major problem with benchmarking?
Which is a major problem with benchmarking? Internal trend data do not indicate how well a company is performing compared to its competitors. There are far too many data available to benchmark. Companies may define and collect data differently, even though the data are named the same..
Why does benchmarking fails?
Skipping the definition of clear objectives Without a clear purpose, benchmark analysis fails to meet expectations. Initially, you should define why you are performing benchmarking, what you really want to know and based on these, you should decide on the KPIs that are critical for s쳮ding your goals..
Another criticism is that benchmarking focuses on 'keeping up' by emulating approaches already in the market rather than considering new options to leap ahead. It also might inadvertently copy negative approaches. Finally, the idea of 'best practice' might be considered to be flawed.
By definition, benchmarking is the term used for comparing one organization's performance with another. So you can theoretically benchmark the performance of any company. Of course, it seems logical to only benchmark against world-class performance.
One of the criticisms of benchmarking is that it can be considered as spying on the competition (Boxwell, 1994). This is not truth. Benchmarking is not spying on the competition but keeping up with what they and the rest of the industry are doing.
Skipping the definition of clear objectives
Without a clear purpose, benchmark analysis fails to meet expectations. Initially, you should define why you are performing benchmarking, what you really want to know and based on these, you should decide on the KPIs that are critical for succeeding your goals.
Failure to monitor progress Once benchmarking has been completed for a specific area or process benchmarks have been established and process changes
Typical benchmarking failures
Discussion with the benchmarked company mostly hinges on the logic of what has worked and why it worked. When the team tries to apply the same logic in their own context, it doesn't work, especially if the pre-requisites of emotion and intuition are absent.
Benchmarking failures
Not meeting a desired or intended objective
Failure is the social concept of not meeting a desirable or intended objective, and is usually viewed as the opposite of success. The criteria for failure depends on context, and may be relative to a particular observer or belief system. One person might consider a failure what another person considers a success, particularly in cases of direct competition or a zero-sum game. Similarly, the degree of success or failure in a situation may be differently viewed by distinct observers or participants, such that a situation that one considers to be a failure, another might consider to be a success, a qualified success or a neutral situation.
Failure is the social concept of not meeting a
Not meeting a desired or intended objective
Failure is the social concept of not meeting a desirable or intended objective, and is usually viewed as the opposite of success. The criteria for failure depends on context, and may be relative to a particular observer or belief system. One person might consider a failure what another person considers a success, particularly in cases of direct competition or a zero-sum game. Similarly, the degree of success or failure in a situation may be differently viewed by distinct observers or participants, such that a situation that one considers to be a failure, another might consider to be a success, a qualified success or a neutral situation.
