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Home > QFINANCE Dictionary > Definition of benchmarking

Definition of

benchmarking

General Management

establishment of baselines and targets for assessing performance the establishment, through data gathering, of targets and comparators, through whose use relative levels of performance, and particularly areas of underperformance, can be identified. By the adoption of identified best practices it is hoped that performance will improve.

There are various types of benchmarking. Internal benchmarking is a method of comparing one operating unit or function with another within the same industry. Functional benchmarking compares internal functions with those of the best external practitioners of those functions, regardless of the industry they are in (also known as operational benchmarking or generic benchmarking). Competitive benchmarking gathers information about direct competitors, through techniques such as reverse engineering. Strategic benchmarking is a type of competitive benchmarking aimed at strategic action and organizational change.

Definitions of ’benchmarking’ and meaning of ’benchmarking’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’benchmarking’ and other financial terms with our online QFINANCE Financial Dictionary.

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