In today’s fast-paced world, businesses are constantly searching for different strategies for improving their business operations. Regardless of industry, each company ultimately seeks to maximize profits while using the most efficient processes possible. To accomplish this, organizations conduct benchmarking.
This process evaluates a company’s success and compares it to other similar organizations, especially industry leaders, to identify potential gaps in performance. One key aspect of benchmarking involves defining what “success” specifically means for your company. Do you define “success” in terms of the ways you conduct certain business processes? Or is this concept more related to the quality of your products or services?
The Four Main Types Of Benchmarking
There are several different ways to perform benchmarking. Some may be more effective than others in helping you achieve your objectives depending on your organization’s industry. Suppose you are a manager or top executive at a firm that provides health insurance and employee benefits. In that case, you will benefit most by comparing your company to other businesses that provide similar types of benefits (e.g., 401k & retirement plans, wellness plans, PEOs, etc.). Here are the four main types of benchmarking your organization may conduct.
Generic benchmarking broadly conceives how unrelated business functions or processes may be carried out in similar or identical manners regardless of the field your company belongs to. For example, an employee benefits provider could compare its strategy for offering health insurance (i.e., how often funds are disbursed) to an insurance firm’s method for offering 401k and retirement plans. This may be a good form of benchmarking to begin with because of how general it is; you may use it to compare your business to almost any other organization in the world.
This type of benchmarking involves comparing results across different industries and processes by utilizing similarities in functional capacities. Functional benchmarking serves as a way to provide information on industry trends. For example, a local coffee shop could compare its brand recognition to those of nearby fitness centers. Alternatively, a luxury hotel could benchmark its customer service quality to that of an airline company.
Internal benchmarking refers to a comparison of one business process to another similar procedure within your company. For instance, you can evaluate how your organization’s medical plans’ price-quality ratio has changed over a given period of time (due to changes in the plans’ costs or the benefits offered).
This involves directly comparing one of your processes, products, or services with a competitor’s. An example of competitive benchmarking would be to compare the employee benefits provided by one manufacturing company in California and those offered by other firms in this industry. Gaining this type of insight can be very helpful in implementing strategies designed to attract and retain key employees.
Other Types Of Benchmarking
Aside from the four primary types of benchmarking, there are three other forms of comparing your business to competitors. They are:
Process benchmarking is designed to help you gain a more accurate understanding of how your competitors’ processes compare to your own. This can help you optimize the efficiency of your business processes.
As its name indicates, this type of benchmarking pertains to your business strategies and how these may help you gain an edge in your field. Regardless of your industry, there are many different tactics you can take to become more competitive.
This is a relatively more difficult type of benchmarking because you need to understand key performance metrics (e.g., number of employees retained in a year) and processes to conduct it. You will likely need to devise a long-term change plan as part of the performance benchmarking process.
Speak To Professional Benefits Consultants About Benchmarking
Reach out to the professionals at New City Insurance in San Diego for more information on the different types of benchmarking and which one may benefit your business the most. Since our founding in 2008, we have been dedicated to helping clients obtain customized, high-quality insurance and employee benefits solutions.
At New City, we invest substantial resources in benchmarking plan designs across a variety of industries. We can provide you with industry-specific plans and average employer contribution amounts so that you may deliver tailored benefits packages to all of your employees. We always survey the market for data as part of this process, which will help you gain more workers and retain them year after year. Simply develop a vision for your business to change and succeed, and we will take care of the rest. Call New City Insurance today at (888) 210-2759 to learn more about our work or contact us online to request a consultation.