Benchmarking in the workplace allows management to evaluate both employee performance as well as overall company performance against a set industry or objective standard. For instance, ACME Company may benchmark that they should product 100 widgets for the month of January, based on the average production rate for a company their size in their specific industry. Their actual production numbers will determine how they performed according to the baseline or benchmark. This sort of management practice allows for proper goal setting, evaluation and performance management. Benchmarking can also be used for in employee evaluations, standards and goal setting. It allows the manager to evaluate an employee’s productivity against a set standard and gives the employee a specific goal that needs to be met.
Benchmarking may however lead to plateaued performance if it is not management properly. For instance, teams or individuals knowing that there is a minimum number on the scorecard that needs to be met, may do just enough work to meet that number but not more. This will result in flat lined or stagnant performance and no gradual improvement and growth as should be required.
A measurement of the quality of an organization's policies, products, programs, strategies, etc., and their comparison with standard measurements, or similar measurements of its peers.
The objectives of benchmarking are (1) to determine what and where improvements are called for, (2) to analyze how other organizations achieve their high performance levels, and (3)to use this information to improve performance. (Business Dictionary)