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Productivity Benchmarks And The Process Of Benchmarking

Apr 3, 2008
Companies in different industries may have different productivity benchmarks. The productivity benchmark of companies belonging to the same industry may even have subtle differences in their productivity benchmarks.

In its basic economic definition, productivity is the ratio of output to input. In most cases, it entails to production and processes. Mostly, the output refers to the product or service in production while the inputs are the resources used for conversion process.

Benchmark, on the other hand, is the standard by which all items are compared and measured. The benchmark of one industry can be different from that of another industry, which can be attributed mostly to the differences in products or services.

Productivity benchmark may then refer to the standard in comparing the productivity of an enterprise to its performance. It may also refer to the standard used as a measure of productivity.

For coming up with a productivity benchmark, it is important for companies to make internal evaluation and assessment of its past and current performances. Each department can have its own productivity benchmark. But in order to have a standard in basing its productivity, it is only good for companies to make thorough scanning and evaluation of performances from the past, as well as to have realistic forecast.

Companies may also have to consider the asset size and number of employees in devising productivity benchmarks. They may also have to see different areas, such as marketing, finance, and production facilities for coming up with written benchmarks.

The process of devising a productivity benchmark involves different areas and factors. There is also an involvement of planning and monitoring of results.

It is important to collect and collate information from different means and areas of interests, such as surveys, industry information, interviews, publications, and other sources of information for analysis and evaluation. In this manner, there is a possibility for an entity to have a clear productivity benchmark as basis for its performance, or the performance of its organization and production process. In order to develop productivity benchmarks, an entity may have to employ the benchmarking process.

There are various forms of benchmarking that entities can apply. Internal benchmarking makes a comparison on the processes and practices of different departments within the organization. Competitive benchmarking involves contrasting the processes of companies with their direct competitors.

Functional benchmarking compares the practices and processes of other industries, while generic benchmarking entails investigation of activities occurred in most businesses.

Benchmarking normally involves the comparison of practices and processes. It can be seen as a strategy of entities to know the moves and practices of their competitors and of other industries to be aware of the things that should be done, as well as to have the reason for emulation when the practices and processes of other competitors and in other industries seem suitable.

Benchmarking can be useful for an entity to develop its productivity benchmark. Productivity benchmark may be seen as a target, in its most basic sense. Mostly, this is set by companies pioneering in a certain industry. It would be on the discretion of other companies to emulate or to make their own benchmarks for productivity.
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