What is benchmarking?

Why is benchmarking Important in public policy formulation?

Benchmarking is the process of comparing a business’s processes and performance metrics to industry bests and/or best practices from other industries. There are many points of comparison which are not limited to measures of quality, time, and cost. Benchmarking seeks to make improvements from these comparisons by learning the means for performing activities better, faster, more efficiently, and with less cost.

Benchmarking evolved out of businesses seeking to strengthen their market positions or to gain competitive advantage. There are many examples of benchmarking with the auto industry as one of the clearest examples. Auto companies not only mimic one another in the manner they tool their assembly lines but have shared methods such as lean manufacturing originated in the Toyota production system. This method of improvement has been adopted in the public sector in order to maximize service.

Competitive comparisons are popular in the public sector and have resulted in benchmarking becoming an important instrument of local government reforms. Local services are usually measured against some generic model of excellence or compared to those provided by local authorities within a similar context. However, most of the benchmarking criteria, models, and methods, which are currently being used, aim at evaluating local service delivery. These benchmarking techniques often involve comparing public with private sector services and policies (Bateman & Snell, 2004).

The special needs of the public sector require different measures of success such as efficiency over profit. What may work in the private sector may not work in the public sector as goals can drive different performance measures. For example, a welfare agency is not seeking a profit objective by servicing clients but instead seeking to cut costs in order to serve more clients or clients more efficiently. Measures of success in public sector agencies may also view goals differently when comparing methods such productivity being associated with outcomes rather than sales increases. While much can be learned from the private sector, objectives and methods must be modified to suit the public sector needs.

A number of factors influencing performance and competitiveness have to be considered as well. It is also important to note that given the multiplicity of possible stakeholders, several forms of benchmarking can emerge in local and regional development strategies. For example, some comparisons may not provide the best information such as comparing welfare with policing since policing is not measured in the success of single outcomes and instead by statistics of crime. Additionally, their systematic illustration and integration in a local government system of performance targets can be identified as the central issue for generic as well as specific benchmarking projects. While benchmarking can be beneficial it must be carefully considered when deciding which agencies and which areas of comparison are to be made.

References

Bateman, T. S., & Snell, S. A. (2004). Management: The New Competitive Landscape (6th ed.). New York, NY: The McGraw-Hill Companies.