Balanced Scorecard and Benchmarking - What is Benchmarking?

Benchmarks in a given area are essentially the levels of performance, that the participants of the domain strive to achieve. Often, these standards are decided by seeing what the industry leader is following.

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Although this works in several cases, but chances of the leader not continuing with the crown are always there. So, one should keep the ‘uncertainty factor’ in mind. Consequently, the appropriate procedure is to consider the ‘leader’s practices’ together with a ‘deep understanding and analysis of the processes that are essential for surviving and thriving in the competition’. Converging the two factors in a ‘balanced’ fashion will give a set of benchmarks to be followed.

Moving further, after deciding the benchmarks, the act of optimizing organizational operations to attain those is initiated. This series of actions is referred to as ‘Benchmarking’. The eventual effects of this practice can range from small changes (to be done here and there) to turn-around practices (such as BPR i.e. Business Process Re-engineering).