Peer Group Profiling: Peer groups are better defined by industry (e.g. comparing a bank with another bank) but sometimes organizations may select a different cut especially if it is to look at the efficiency of a particular process. Selecting the right peer group is important and comparisons help reduce barriers to change.

Helps Reach Global Standards: In order that organizations in India become globally competitive, benchmarking can be an important input in studying aspirational standards and defining a plan and strategy to achieve the same.

Business and Operational Leverage: Benchmarking is not about reinventing the wheel—it is a surefire way to learn the way globally competitive organizations operate in one’s industry space and learn about global best practices so that mistakes are not repeated. A benchmarking exercise, followed by regular performance improvement programs and special initiatives can help organizations see rapid improvements.

Methodology and Use of Data: Benchmarking provides for best-in-class comparison; helps identify areas of improvement, adaptation and change; validates business models; clearly identifies opportunities for cost reduction, and helps understand performance gaps in financial terms.

Benchmarking takes time, effort and dedication and its real results are apparent over a period of two or more years.

However, the study itself is short and sharp and best conducted in about 1-2 weeks. It needs a multifunctional team to answer the questionnaire and can be politically sensitive for any organization since it means honestly sharing key performance data. It also needs strong facilitation skills, both to complete the exercise and to interpret the results and maximize its intrinsic value.

EXPERTS PANEL Ranganath Iyengar and Ranbir Sarkar, co-founders, Think Harbor