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Benchmarking: A Process for Learning or Simply Raising the Bar?

Article  in  Evaluation Journal of Australasia · January 2009

DOI: 10.1177/1035719X0900900203

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 REFEREED ARTICLE
Evaluation Journal of Australasia, Vol. 9, No. 2, 2009, pp. 7–15

Benchmarking: a process for

learning or simply raising the bar?

Benchmarking has been a credible approach to Michael J Cole

quality improvement and program evaluation for
more than 30 years. However, the term has been
used and abused so much since the 1970s that
now an author might be describing anything from
the establishment of performance indicators, to
competitor ranking, or gap analysis, through to a
continuous quality improvement process. Equally
confusing is the plethora of different benchmarking
models published. A literature review was conducted
in which 65 publications from 1998–2008 were
analysed and synthesised in order to untangle the
confusion surrounding the contemporary theory
and practice of benchmarking. This article clarifies
Michael J Cole is an Aid Effectiveness
the terminology and concepts of benchmarking, Adviser in the Bangkok Regional Office
synthesises a concise practical definition, examines of the Australian Agency for
various approaches in the current theory and International Development.
application of benchmarking, and explicates the Email: <michael.cole@dfat.gov.au>
features most consistent with the goal of continuous
quality improvement and organisational learning.

Introduction
Benchmarking is a commonly used term and an integral part of the modern
lexicon of evaluation; in spite of this, a recent review of the literature by
the author revealed a great deal of confusion about what is actually meant
by benchmarking. Originally it was conceived as a continuous quality
improvement process, in which an organisation striving for best practice
compares its performance with another in an effort to learn and progress.
However, it seems it is often operationalised now as a simple ranking process.
Nevertheless, its greatest potential remains as a vehicle for the sharing and
transfer of best-practice knowledge, along with its tangible contribution to
the development of learning organisations ‘… that can analyse, reflect, learn
and change based on experience’ (Bhutta & Huq 1999, p. 256).
The purposes of this exploration are to determine from the literature: how
the terminology of benchmarking is being used and to untangle some of the
confusion surrounding the concept; to synthesise a concise definition that
is inclusive and has utility; to examine and compare various approaches in
the current theory and application of benchmarking; and finally, to elucidate
the features that are most likely to fulfil the promise of continuous quality
improvement and organisational learning outcomes.

Cole—Benchmarking: a process for learning or simply raising the bar? 7

REFEREED ARTICLE
The search process
The area of enquiry was the theory and practice
in benchmarking for program evaluation over the
decade, 1998 to 2008. Publications were sought
and collected primarily using Internet searches of
multiple databases and online journals, such as
those of the American Evaluation Association. The
libraries of University of Melbourne and Bangkok
University also supplemented the electronic
resources with a modest number of relevant hard-
copy publications. Keywords used for the search
were ‘benchmark’, ‘benchmarking’, ‘program’,
‘assessment’ and ‘evaluation’. The publication
dates were limited to 1998 to 2008 in order to
select the most recent material for determining
current practice, theory and trends. Publications
representing divergent fields of practice were
incorporated intentionally so that a broad view of
current practice and opinion could be consulted. In
all, 65 publications were reviewed and analysed.
The rich descriptions in each document were
compared, contrasted and then synthesised to
produce the findings and discussion presented here.
Background
Originally championed in the private sector, first in
manufacturing, then management and marketing,
benchmarks and the benchmarking process are
currently used in a vast and diverse array of fields
including engineering, family and community
services, financial services, higher education, human
resources, information technology, insurance,
hospitals, local government and public utilities
(Alstete 2008).
There is evidence that the process was first
used in Japan where it was termed ‘Dantotsu’. In
fact, during the post-World War II reconstruction
period the USA often accused Japan of studying
their products and processes, copying them, and
then improving upon them. This was essentially the
core of what later became known as benchmarking
(Bank 2000; Boulter 2003).
Xerox is frequently credited with initiating the
formal practice of benchmarking in 1979 (Anand
& Kodali 2008; Ford & Hibbard 2000; Smith
2006;). Moreover, Robert Camp at Xerox was
certainly the first to formulate, test and publish a
cohesive model of benchmarking, which he elucidates
in his modestly titled publication, ‘A Bible for
Benchmarking, by Xerox’ (1993). Challenges by
Japanese firms had led to a sharp decrease in revenue
and market share for Xerox and so prompted the
drive for quality as a means of survival. Xerox
studied its direct competitors to identify how
their performance compared, and how they could
improve. Furthermore, imaginatively, Xerox also
studied similar processes of high achievers outside
their own industry. In 1986 the decline in market
share had begun to reverse and by 1991 Xerox had
significantly revised its quality strategy, from meeting
benchmarked competitors, to becoming the leader in
the European market (Zairi & Whymark 2000a).
8 Evaluation Journal of Australasia, Vol. 9, No. 2, 2009
The adoption of benchmarking by private and
public sector organisations seems to have grown
rapidly from the mid-1980s to a peak in the mid-
1990s, which is reflected in the volume of literature
on the subject during this decade. From that period
onwards its popularity seems to have waned to some
degree, with the practice often either replaced by or
absorbed into other evolving quality systems.
Terminology
The terminology used by organisations and
researchers to discuss benchmarking is often unclear
and confusing, as has been noted by various authors
(Alstete 2008; Fine & Snyder 1999). Terms such as
‘standard’, ‘target’, ‘benchmark’, ‘benchmarking’,
‘performance measurement’, ‘performance statistics’
and ‘performance indicators’ were often used
interchangeably (Bowerman et al. 2002; Hinton,
Francis & Holloway 2000). Over the period of
the literature reviewed particular distinctions seem
to have grown, quite organically as it were, from
author to author about the meaning and context of
these various terms.
It is worth spending a little time exploring this
aspect because it will help refine the focus of this
article, as well as illustrate some pertinent issues in
the recent development of the theory and practice
of benchmarking for program evaluation. It is
also critical to untangling some of the confusion
surrounding the topic. A quote from the AusAID
Performance Assessment and Evaluation Policy
seems pertinent at this point:
Confusion about the meaning of particular words
is by no means the most significant challenge we
face in implementing the performance agenda, but
it can affect how we think about performance,
how effectively we use … tools for monitoring and
reporting, and the value we get from training and
guidance in this field (AusAID 2007, p. 9).
The Australian Modern Oxford Dictionary
(Ludowyk & Moore 2000, p. 67) defines a
benchmark as ‘a standard or point of reference’. It
also defines a standard as both ‘the specification by
which something is measured’ and as ‘the required
level of quality’.
The misuse of the term by some authors means
that a benchmark could be a specification, a
variable, a required level of quality or a reference
point. When using common parlance, the required
level of quality for a variable benchmarked as a
target could translate as: ‘the standard standard of
a standard’. This is not meant to be glib, but simply
to illustrate the potential for circular definitions
and general confusion, which can occur over time
in the absence of a common unifying framework
and technical language, or where everyday language
is used interchangeably with terms that have a
precise meaning within a specific context. It also
demonstrates the confusion that arises from the use
of tautological constructions such as a benchmark
 REFEREED ARTICLE

standard, which simply add to the jargon rather attractive to partnerships, rather than the more
than our clarity or understanding. resource-intensive and time-consuming processes
of reflection and development.’ The true irony, as
will be described later in this article, is that when
A ‘benchmark’ or ‘benchmarking’ understood and implemented as a whole, the
It is important to make the distinction between Benchmarking process is indeed a time-consuming,
the establishment of a point of reference and reflective practice that promotes development.
undertaking a comprehensive continuous quality The comparative analysis of performance is
improvement process. This distinction is frequently sometimes also confused with true Benchmarking.
lacking in the literature, where too often the On this point Fine and Snyder (1999) clarify that
establishment of a benchmark is presented as performance measurement is one of the first steps
though a complete benchmarking process has been in the quality improvement process involving the
undertaken. To assist the reader in following the definition, selection and application of performance
discussion, as well as to emphasise the distinction indicators, whereas Benchmarking is a continuous
between a benchmark as a point of reference and process including implementation of reforms,
Benchmarking as a distinct formalised model evaluation of outcomes and review of the previous
of quality improvement, henceforth the term performance indicators or benchmarks.
‘Benchmarking’ will be capitalised in this article. In his bluntly titled article ‘Measurement
More than a quarter of the publications reviewed benchmarks or “real” benchmarking?’, Alstete (2008,
simply discussed Benchmarking as the establishment p. 79) throws down the gauntlet and expounds
of performance indicators or Benchmarking targets. unambiguously that ‘… organizations of all types
In addition, some authors limited their description today are concerned with comparing performance
of Benchmarking to the stage of ranking their firm for internal assessment, publicity and marketing
with competitors (Dawkins, Feeny & Harris 2007). purposes, and perhaps pride. True benchmarking …
Others equated Benchmarking only with the [is] … focused on specific process improvements and
process of comparative or gap analysis (Kumar increased organizational effectiveness’.
et al. 2008). In respect to customer service for The remarkable variation in the definitions
example, Bordley (2001) states that the benchmark and descriptions of Benchmarking evident in the
is simply customers’ product expectations, and literature, could be conceptualised as a linear
describes determining the gap between customers’ progression of increasing comprehensiveness
perceptions of the actual product and their advancing through the stages of Benchmarking; that
expectation as effectively being Benchmarking. is, from the definition of performance indicators to
Meanwhile Halliday, Asthana and Richardson the description of an institutionalised continuous
(2004, p. 286) refer to Benchmarking disparagingly quality improvement process. This could be
as a simple ‘health check’. They then go on to say, represented visually (Figure 1) with the various terms
‘Ironically, it is the least satisfactory dimension, used to define and describe Benchmarking taken from
the ability to benchmark, that is often the most the literature and presented on a continuum.

Figure 1: Visually depicts with the various terms used to define and describe Benchmarking
presented as a continuum
Establishment of performance indicators
Definition of performance indicators

Continuous improvement process

Ranking competitors/comparison
Performance measurement

Implementation of reforms
Performance comparison
Setting targets

Gap analysis
organisation

Cole—Benchmarking: a process for learning or simply raising the bar? 9

REFEREED ARTICLE
Benchmarking defined
At Xerox in the early 1980s, Benchmarking was
described as ‘… the continuous process of measuring
our products, services and practices against those of
our toughest competitors or companies renowned
as leaders’ (Camp 1993, p. 23). Other definitions
abound. As early as 1992, Spendolini (cited in
Anand & Kodali 2008) had found 49 distinct
definitions for Benchmarking in the literature.
Denkena, Apitz & Liedtke (2006, p. 191)
observed that ‘many regard benchmarking as a
method to compare key figures, often financial
ones, for the purpose of ranking the organization in
relation to competitors or the industry average’, but
then go on to refute that, saying ‘… improvement is
the ultimate objective of any benchmarking study’.
It is essentially concerned with understanding how
processes work, to learn from the observation of
best practice, and to make improvements necessary
to reach those standards of excellence (Smith 2006).
Definitions in the recent literature have
also become increasingly sophisticated and
comprehensive. The essential ingredients to
any functional definition of the Benchmarking
process are the ideas of measurement,
comparison, identification of best practices,
learning, implementation, review and continuous
improvement (Anand & Kodali 2008; Bank 2000;
Bhutta & Huq 1999; Evans 2008; Reider 2000).
A related issue is the use of the term ‘best
practice’. Best practice suggests an ultimate goal,
and a static one at that. On the contrary, in
reality so-called best practice is continually being
transformed into, or surpassed by, better practice.
While some might want to argue over the semantics
Figure 2: Representation of the Benchmarking process (adapted from Reider 2000)
QUALITY
Benchmark (best practice)
Benchmark gap
Organisation (current practice)
Action plan
10
of a comparative being used as a superlative and
vice versa, it is conceptually more useful to describe
the quest for continual quality improvement as
searching for and trying to achieve ‘better practice’,
or ‘even better practice’.
Synthesising from the literature reviewed, a brief
but complete and operational definition would be:
Benchmarking is a continuous quality
improvement process. It is used to identify and
understand the practices exhibited by the best in
their field; to adapt and improve those practices,
for the purpose of reaching the targeted level of
excellence, and then surpassing it with even better
practice.
Figure 2 shows the gap between the actual
organisation performance and the desired
performance of the benchmark, that is, the
benchmark gap. An action plan is put in place to the
meet the benchmark. Note also that the benchmark
is not static but continually reviewed and redefined
(Price 2005). The diagram illustrates that ideally the
aim of the organisation is to continue to improve
performance and surpass the benchmark and thus
‘best practice’ becomes ‘even better practice’.
Purpose of Benchmarking
Benchmarking prevents the organisation or
organisational unit from becoming insular and
stagnant. Bhutta & Huq (1999, p. 254) call it ‘…
a way to move away from tradition’. It enables
organisations to look more objectively at their
strengths and weaknesses (Evans 2008). Moreover,
it facilitates the organisation to become a more open
system, increasing interactions and information
Even better practice
Surpassing the benchmark
Meeting the benchmark
TIME
Evaluation Journal of Australasia, Vol. 9, No. 2, 2009
 REFEREED ARTICLE

flows within its operating environment. This
enhances identification of customer requirements,
development of accurate measures of productivity
and the establishment of effective goals and objectives
(Bank 2000). Identifying that someone has solved
a problem and obtaining ideas from those who are
getting superior results also motivates higher levels of
performance (Anderson & Fagerhaug 2000). Bank
(2000) puts it very simply and powerfully when he
says the purpose of Benchmarking is to be better than
the best competitor.
Models and processes
The Benchmarking model developed at Xerox
(Camp 1993) had four phases: Planning, Analysis,
Integration and Action. Within these four phases the
model listed a sequence of 10 essential steps:
1 Identify what is to be benchmarked.
2 Identify comparative companies.
3 Determine data collection method and collect
data.
4 Determine current performance levels.
5 Project future performance levels.
6 Communicate benchmark findings and gain
acceptance.
7 Establish functional goals.
8 Develop action plans.
9 Implement specific actions and monitor progress.
10 Recalibrate benchmarks.
A more recent analysis (Zairi & Whymark
2000b) of the continuing development of
Benchmarking at Xerox did not increase the number
of steps, but did add a fifth phase, Maturity, in
which the company has attained a leadership
position and Benchmarking has become an essential
and embedded continuing process. The researchers
also described the objectives of each phase. Their
analysis and discussion has been reproduced for ease
of examination in Table 1.
Over time, the original 10-step process
established by Camp at Xerox appears to have
been abbreviated. Most of the authors in the
literature reviewed referred to models developed by
previous researchers, usually one of various five-step
models developed in the early to mid 1990s. The
most commonly cited five-step model was that of
Spendolini (1992, cited in Shen, Tan & Xie 2000;
Anand & Kodali 2008; Bowerman et al. 2002;
Denkena, Apitz & Liedtke 2006).
Of those authors who proposed their own
adaptation or formulation, various interpretations
were presented ranging from Watson’s (2005) three-
step process, which concluded with a comparative
analysis, through to Owen’s (2006) eight-step
model, which firmly imbeds a practice of continuous
quality improvement within the organisation.
A comparison of the steps in various models is
presented in Table 2. At times authors truncated
the steps in the Benchmarking process and in some
circumstances they compressed steps together.
Meszaros and Benson (2003), for example, present
a four-step Benchmarking process in which they
actually compressed two distinctly disparate
activities ‘compare and contrast data’ and ‘plan

Table 1: Benchmarking at Xerox as a five-phase model with objectives of each phase described

Phase Objectives
1 Planning The objective of this phase is to prepare a plan for Benchmarking.
2 Analysis This phase will assist companies to understand competitors’ strengths and assess their
performance against these strengths.
3 Integration The objective of this phase is to use the data gathered to define the goals necessary to gain
or maintain superiority and to incorporate these goals into the company’s formal planning
process.
4 Action During this stage, the strategies and action plan established through the Benchmarking
process are implemented and periodically assessed (recalibrated) with reports of the
company’s progress in achieving them.
5 Maturity The objective of this is to determine when the company has attained a leadership position
and to assess whether Benchmarking has become an essential, ongoing element of its
management process.

Cole—Benchmarking: a process for learning or simply raising the bar? 11

 Table 2: A comparison of Benchmarking models in recent literature

Reference Watson 2005 Meszaros & Smith 2006 Bhutta & Huq Bank 2000 Evans 2008 Bhutta. & Huq Maire, Bronet & Ammons 1999 Reider 2000 Owen 2006
Benson 2003 1999 1999 Pillet 2008
Sector HVAC University Human resources Manufacturing Management and Business Kodak Small to Public Management and General

12
engineering business manufacturing— medium-size administration business
case study enterprises
Number of 3 4 4 5 5 5 6 6 7 7 9
steps
Stage Plan Plan Plan Plan Plan Plan Plan Plan Plan Plan Plan
Step 1 Defining Plan the study— Planning— Determine what Decide what is to Identify the area What to Plan—determine Decide on what Identification of Identification
parameters use consensus investigation, to benchmark be benchmarked: of operation to be benchmark critical processes process to core issues and of the area of
to select similar measurement products, benchmarked to compare, benchmark critical areas for operation to be
REFEREED ARTICLE

departments for and examination services or define data to improvement benchmarked

comparison of strengths and business be collected and
weaknesses processes plan various
of current steps of the
processes project
Stage Plan Collect and Collect and Plan Plan Plan Plan Plan Plan Plan Plan
analyse analyse
Step 2 Reaching Conduct the Analysis— Establish Select Identify of the Establish teams Research— Study the Detailing the Identification of
consensus on research— identifying benchmarking competitors key performance determine process in your workflow and ‘best practice’
the most critical agreement on potential teams who are the indicators to measurements own organisation process steps in selected
elements to data collection, benchmarking best in terms of measure to be used, to organisations
measure and parameters and partners and those products, identify the future or sections of
track timelines then exchanging services or partners and to organisations
information, business collect available
and observing processes data
and comparing
processes
Stage Collect and Collect and Plan Plan Plan Plan Plan Collect and Plan Plan Collect and
analyse analyse analyse analyse
Step 3 Data collected Analyse data— Implementation Identify partners Decide most Identify of the Identify partners Observe— Identify Questioning each Collect and
and comparisons compare and — adaptation to benchmark appropriate best-in-class and identify collect the Benchmarking function, activity analyse
made to contrast data and modification against and measurements companies critical measures complementary partners or work step information
identify the top from each school of processes identify critical to define data, observe to determine
performers and analyse based on measures performance similarities and common
ranking. Plan learning from the and develop a differences in characteristics of
new goals for analysis stage strategy for data processes best practice
following year collection
Stage Implement Plan Collect and Collect and Collect and Collect and Collect and Collect and Collect and Collect and
analyse analyse analyse analyse analyse analyse analyse analyse
Step 4 Adapt best Review— Collect data Determine Measure best-in- Collect data Analyse— Analyse the Data collection Develop best
practices to ongoing review competitors class companies analyse current process partners practice
guide operations and refinement strengths and and compare practices and to identify indicators and
and achieve with the intention assess against results to own to decide differences levels to be
department goals of achieving own company performance operational that account achieved on

Evaluation Journal of Australasia, Vol. 9, No. 2, 2009

continuous performance or strategic for superior these indicators
improvements practices to use performance
 Table 2: A comparison of Benchmarking models in recent literature (CONTINUED)

Reference Watson 2005 Meszaros & Smith 2006 Bhutta & Huq Bank 2000 Evans 2008 Bhutta. & Huq Maire, Bronet & Ammons 1999 Reider 2000 Owen 2006
Benson 2003 1999 1999 Pillet 2008
Sector HVAC engineering University Human resources Manufacturing Management and Business Kodak Small to Public Management and General
business manufacturing medium-size administration business
—case study enterprises
Number of 3 4 4 5 5 5 6 6 7 7 9
steps
continued from previous page
Stage Implement Collect and Implement Collect and Implement Implement Collect and Plan
analyse analyse analyse
Step 5 Adapt and Develop an Define and take Gap analysis Adapt— Adapt and Analysing and Communicate
improve action plan. Use actions to meet understand new implement ‘best interpreting the best-practice
analysed data or exceed the practices and practices’ information dimensions in
to set company best performance adapt them to the organisation to
goals to achieve new context gain acceptance
superiority
Stage Review Review and Review Implement Implement
institutionalise
Step 6 Feedback and Improve— Monitor and A plan is properly Development and
review implement and revise developed and implementation
follow up the best practice of plans to
implementation implemented achieve these
of these practices levels
Stage Review Review and Review
institutionalise

Cole—Benchmarking: a process for learning or simply raising the bar?

Step 7 Feedback and Management— Progress
review redefine monitoring
benchmarks and
review operations
as continuous
improvement
Stage Plan or
institutionalise
Step 8 Full integration of
practice into the
functioning of the
organisation
REFEREED ARTICLE

13
REFEREED ARTICLE
new goals for following year’ into their third
step. Predominantly though, the explanation for
the difference in number of steps is quite simple,
and again goes back to the authors’ understanding
and definition of Benchmarking. A number of them
operated under the assumption that Benchmarking
meant either: the establishment of performance
indicators, a comparative/gap analysis, or a ranking
exercise, and so simply stopped describing the process
at those points. Some also presented Benchmarking
as a single event rather than a continuous process and
so, even though they described it through to
planning and implementation, they left off any
recalibration of benchmarks or further review of the
Benchmarking process.
Ultimately, it is when Benchmarking has
become institutionalised as a continuous quality
improvement process that it can achieve its
potential in contributing to the development of a
learning organisation. In this situation it could be
viewed as an example of a practical participatory
evaluation approach (Cousins & Earl 1995, cited
in Alkin 2004).
Table 2 lists the publication, reference,
sector if specified, and the steps described in the
Benchmarking process. The various models reviewed
were analysed for component stages, these were
then synthesised to produce common stages in the
Benchmarking processes. All steps in each model
were then classified according to the following
stages:
■■ planning the Benchmarking process
■■ the collection and analysis of data
■■ implementation of the adapted practice
■■ review of the new practice
■■ institutionalisation of the Benchmarking process
itself.
Anand and Kodali (2008) reviewed the best
practices in Benchmarking and proposed a
model that consists of 12 phases and includes 54
steps (see Figure 3). While they claim that this
was a Benchmarking exercise on Benchmarking
practice, they did not implement it and so by
definition it was not a true Benchmarking process.
However, they candidly acknowledged that ‘…
one of the limitations of the model is that it is
highly conceptual and has not been validated
by implementing it in industries to assess its
effectiveness.’ (p. 282). The model was not included
in Table 2 for this reason, but this not intended to
imply that it does not have merit, and in fact it does
warrant testing in the field.
Under each phase, several detailed steps are
described. While its meticulous detail could be
considered too prescriptive by veteran evaluators
experienced in Benchmarking, conversely its
inclusiveness would make it easy for a novice
practitioner from virtually any field to saunter
through the Benchmarking process, confident
that they had not missed any critical component in
the sequence.
14
Figure 3: Anand & Kodali’s (2008) 12-phase
conceptual model of Benchmarking
1 Team formation
2 Subject Identification
3 Customer validation
4 Management validation
5 Self-analysis
6 Partner selection
7 Pre-benchmarking activities
8 Benchmarking
9 Gap analysis
10 Action plans
11 Implementation
12 Continuous improvement
Conclusions
The theory and practice of Benchmarking has grown
rapidly and organically over the past decade.
As a result, there is a great deal of diversity in
approaches, along with confusion in the terminology
used by organisations and researchers to discuss
Benchmarking.
As it continues to progress, one of the challenges
Benchmarking faces is whether or not it can
evolve and adapt in diverse contexts, yet maintain
a common language that facilitates the transfer
of research findings and promotes professional
development and organisational learning. More
precise terminology should be promoted by
management leaders, educators and researchers.
It seems that the evolution of Benchmarking has
now passed the point where the development of a
unifying model or common theory of Benchmarking
is possible. However, an examination of the various
models illustrates that a comprehensive process
can and must be used if one is to undertake an
authentic Benchmarking exercise that will result in
improvement in both quality and learning outcomes.
A key question is whether Benchmarking will
come to be used mechanically to raise higher targets
that drive management and staff to report against.
Or will it maintain its integrity as a holistic approach
to evaluation that can be a pathway towards
collaborative continuous improvement and the
development of a true learning organisation.
Ultimately, it has potential as a vehicle for
objective feedback, challenging mental models,
encouraging reflective practice and ensuring
continuous improvements that all contribute to the
development of learning organisations. Senge (1990,
p. 3) envisioned organisations ‘… where people
continually expand their capacity to create the results
they truly desire, where new and expansive patterns
of thinking are nurtured, where collective aspiration
is set free, and where people are continually learning
how to learn together’.
Evaluation Journal of Australasia, Vol. 9, No. 2, 2009

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