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To do benchmarking, management identifies the best firms in the market that are doing similar processes as their own company. Once they figure them out, they try to compare the results of the companies and analyze what made them the best. It is also referred to as best practice benchmarking and process benchmarking. Benchmarking helps organizations to develop plans or make improvements or adapt specific best practices to improve their results and process.

Benchmarking is now a widely accepted methodology and there certainly is no one single way using which companies do it. However, there is a common 12 step methodology which is molded to implement benchmarking.

The 12 step methodology consists of :

1. Select the subject
2. Define the process
3. Identify potential partners
4. Identify data sources
5. Collect data and select partners
6. Determine the gap
7. Establish process differences
8. Target future performance
9. Communicate
10. Adjust goals
11. Implement
12. Review and recalibrate

Cost Involved

1. Visit Costs – This includes the hotel rooms, travel costs, meals cost, token gifts.
2. Time Costs – When doing benchmarking the team gives in the time for researching problems, finding exceptional companies to study, visit and implementation.
3. Benchmarking database costs– Organizations that implement benchmarking prefer creating and using a database.