Sitting on the Benchmark

Wednesday, 12 December 2007 04:33

Performance differences are difficult to benchmark across companies, due to variances in accounting procedures. To begin comparing performance between companies, one must first decide what to measure. Depending on what is being benchmarked, the measurements could focus on unit costs, efficiency, or productivity ratios. The formulas for these ratios would need to be broken down into their smallest component parts for comparison. These parts must be equivalent so that the comparison can be based on similar data. Companies that are in the same country and same industry will have a better chance of finding comparative measurements. The ratios can then be compared to gauge performance between the two companies.