A benchmarking gap refers to the difference between an organization’s current performance level and the performance level of industry leaders or best practices. The benchmarking gap represents how much an organization needs to improve in order to reach an external standard or benchmark.
The Core Tenets of Benchmarking Gap
- Identifies areas for improvement by comparing current performance to industry standards
- Motivates change by revealing the extent of the performance gap
- Focuses efforts on closing the largest gaps first
- Enables fact-based goal-setting aligned with best practices
- Tracks progress over time as the gap narrows
Why Benchmarking Gap is Important to Business Consultants
Identifying and closing benchmarking gaps is a key focus area for business consultants. It provides an objective way to show clients where their performance levels stand relative to industry leaders and best practices. Demonstrating significant gaps can motivate clients to embark on improvement initiatives. Consultants can leverage benchmarking gaps to set tangible performance goals based on real-world standards rather than arbitrary targets. Tracking changes in benchmarking gaps over time provides a measurable way to demonstrate progress and ROI of improvement efforts. Overall, the benchmarking gap concept gives consultants a robust fact-based framework to diagnose areas for improvement, set goals, and track progress in a way that clients find compelling and meaningful.
Example of Benchmarking Gap in Use
- A manufacturing client had a scrap rate of 7%, significantly higher than the industry average of 3-4%. Quantifying this benchmarking gap highlighted the magnitude of the problem and drove an initiative to implement lean manufacturing tools to reduce defects.
- An HR consultant used compensation data to show a retail client that their store manager pay was 20% below median market rates. This gap analysis led the company to increase pay and reduce turnover.
- A hospital’s patient satisfaction scores were 15 points below top-performing hospitals. The C-suite made closing this gap over 2 years a key strategic priority to remain competitive.
Benchmarking Gap Synonyms
- Performance gap: The difference between current and desired performance levels.
- Gap analysis: Comparing present performance against a standard to determine gaps.
- Opportunity gap: The gap represents an opportunity for improvement.
- Shortfall: How much the performance falls short of a benchmark.
Benchmarking Gap Antonyms
- Parity: A state of performance matching the benchmark standard.
- Best practice: The benchmark representing optimal performance.
- Industry average: The typical midpoint performance level.
- Lagging: Behind the benchmark; the opposite of leading.
Other Closely-Related Terms
- Benchmark: A standard or point of reference against which performance is compared.
- KPI: Key performance indicator used to quantify performance.
- Benchmarking: The practice of comparing performance against benchmarks.
- Maturity model: Framework to assess capabilities against best practices.