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What is Benchmarking - and Why Is It Important?

 
  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
   
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  Article Summary  
While many Los Angeles and Southern California executives measure company performance by monitoring key performance indicators (or KPIs), this is just a first step.

Benchmarking is the process of comparing your business' KPIs or other performance indicators to an objective standard, and research has determined that companies whose best practice performance measures rank in the top quartile of their industry are 10 times more profitable than companies that rank in the bottom quartile.

This article identifies the many advantages of benchmarking including how taking numbers out of isolation and comparing them to industry patterns identifies prioritized areas for improvement. Also included are initial steps to take to implement benchmarking, as well as sources for specific industry benchmarking statistics.

Benchmarking leverages the value of internal KPIs and provides for direct comparison to data patterns in your industry. It also supports internal initiative focus and can contribute significantly to improved performance in targeted areas. An outsourced CFO services provider experienced in benchmarking implementations can help you generate relevant KPIs for your business and industry and then benchmark them against appropriate industry standards.

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