What is good performance? Benchmarking enables a team, a business, or an industry to understand performance, facilitate best practice discussion and therefore can lead to substantial efficiency improvements.
Managers are always looking to reduce cost and improve efficiency, but deciding when cost should be the focus as opposed to efficiency is not as straightforward. Visibility on the performance of peer groups (even if un-named) allows the manager to determine whether cost issues exist and the extent of the problem. Whether benchmarking cost, quality, or timing, using simple ranking metrics or complex statistical algorithms, benchmarking can lead to company or industry-wide discussion on cost improvement.