What is benchmarking?

Definition of 'Benchmark'

A standard against which the performance of a security, mutual fund or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.

 

When evaluating the performance of any investment, it's important to compare it against an appropriate benchmark. In the financial field, there are dozens of indexes that analysts use to gauge the performance of any given investment including the S&P500, the Dow Jones Industrial Average, the Russell2000 Index and even competitor fund.

A Benchmark is a set of standardised tests to assess performance, whether it's of a person, a company or a machine. It may also mean a standardised level or expected performance. Different companies and organisations may have their own tests which use different criteria & different scoring systems.

It is the process of setting the standard or minimum accepted value or figure which is being fixed and for next years results will be measured against them.

kpi summary

the best in class

Benchmarking is to compare yourself with the best in class in the same market.

Accessing a process performance. Usualy done when you measure a problem in the process outcome.