When done correctly, benchmarking can be a useful practice. Benchmarking can lead to performance improvement and can help an organization take a new approach to goal setting. However, the benchmarking process is often flawed in many organizations.
A major drawback of benchmarking is that while it helps organizations measure the efficiency of their metrics, it provides too little information to measure the overall effectiveness of the metrics. Benchmarking reveals the standards attained by other organizations but does not consider the circumstances under which the others attained those standards. If the other organizations’ goals and visions were flawed or severely restricted due to some unique factors, by benchmarking those standards an entity runs the risk of trying to duplicate such imperfect standards.
Another problem with benchmarking is it may lead to complacency. Many organizations tend to relax after meeting or exceeding others’ standards, allowing complacency to develop. The realization of having become an industry leader may soon lead to arrogance, when the capacity for further improvements remains.
An additional mistake is that many organizations undertake benchmarking as a stand-alone activity. Benchmarking is only a means to an end, and it is worthless if not accompanied by a plan to change.