The Basics of Benchmarking Data and Different Types

Benchmarking Data is used by healthcare organizations to compare their business practices with other healthcare organizations (and sometimes organization in different industries) to identify areas of improvement and/or change. During benchmarking, an organization compares their business processes and performance metrics with those of the industry best standards and practices.

The most common metrics measured during benchmarking are quality, time, and cost. Now, you might be wondering “how are industry best practices identified?”. The most common way of identifying industry best practices is by identifying the best firms in the industry and in other industries that have similar processes and then comparing results, processes, and methods. This leads to a target being set and some sort of reverse engineering is done in order to mimic their success.

Types of Benchmarking and Benchmarking Data

There are different types of benchmarking and some firms choose to do just one, while others do all or a couple of benchmarks. The type of benchmarking carried out by firms depend on the strategic goals of the organization, the resources they have and the benchmarking data available to them

Benchmarking Data

Internal Benchmarking

Internal benchmarking is the comparing of the internal structure of one organization with the internal structure of another. It involves benchmarking to improve the internal workings of a firm so things like human resources, company culture, employee and management relationships etc can be copied and would lead to an increase in productivity in a firm. Internal benchmarking is arguably the easiest type of benchmarking.

Competitive Benchmarking

Competitive benchmarking is the direct comparison with a competitors practices. With competitive benchmarking, it can be easy to break the law so care must be taken not to steal a competitor’s ideas, commit espionage or directly copy a competitor. This makes it one of the hardest forms of benchmarking. The laws surrounding this are complex and there are grey areas. Lines can easily be crossed if an organization does not know what they are doing. If a company wants to carry out competitive benchmarking it should organize a team of experience benchmarking experts and legal experts too.

Functional Benchmarking

Functional benchmarking can cut across different industries. It is the process of comparing an operating in an organization with that of a similar organization or an organization that has similar operating. So for example, a hospital can compare their check-in systems and bed availability record keeping systems with that of a hotel that also has such systems to keep track of available rooms and hotel guests. DIfferent industry but similar functions.

Generic Benchmarking

This is the process of comparing the business practices of businesses in unrelated industries. It’s a general comparison to see how a business is run and to see how it can be replicated in one’s own organization. The advantage of this kind of benchmarking is that there is no threat of competition involved so it’s easier to get benchmarking data and information. There is little possibility of having legal problems with generic benchmarking.

Collaborative Benchmarking

Collaborative benchmarking is the process of carrying out benchmarking activities as a group with other companies. It can be done among subsidiaries of a larger conglomerate or it can be done among different companies who agree to share internal benchmarking data and benchmark against other parameters and sometimes other industries. Commonly, large consulting firms are often hired due to their access to competitive benchmarking information, which they have acquired by working with large numbers of companies.

Components of Benchmarking

Effective Practice

Effective practice is used to refer to the best, most effective, most innovative or most promising aspect of a company’s practices that can be benchmarked against. It doesn’t have to be the best practice to be classified as effective. The term can be used rather loosely.

Best Practice

This is a phrase commonly used in business. In benchmarking copying best practices is expected to help the organization reach the highest level of effectiveness and get the best outcomes. All benchmarking endeavors are expected to aim toward copying best practices.

Promising Practice

Promising practice is as the name implies quite promising. It is benchmarking done against technique, business models, strategies, and business processes that are promising. Promising practice can be done with subjective data such as interviews and word of mouth. Promising practices do not have structured or official validation as they can not be justified yet.

Innovative Practice

Innovative practices are benchmarked by organizations that appreciate the importance of innovation. Innovative practices are methods, techniques, or business processes that have worked in an organization and shows promise in its early stages. An example of innovative practice would be the embracing of remote work by older companies who try to benchmark against startups that put this practice to use. In order for innovative practices to be benchmarked against, they must have some objective basis for claiming effectiveness and must have the potential for replication among other organizations.

Watch this video on Benchmarking