THE PRACTICES AND CHALLENGES OF BENCHMARKING IN SELECTED ETHIOPIAN COMMERCIAL BANKS

Abstract

Banking sector is one of the most successful financial institutions in Ethiopia; however, there is almost no study on benchmarking about this sector. This study investigated the practices and challenges of benchmarking in selected Ethiopian commercial banks. The increasing knowledge and understanding on the practice of benchmarking, for the area in which this research was undertaken by referring of the research undertaken in other country, were taken as the major initiators of this study and were the rationale to the research. This study focused only the practices and challenges of benchmarking in selected Ethiopian Commercial Banks. The study employed both qualitative and quantitative study approaches. To achieve the objectives of the study respondents were drawn from four private commercial banks since their job is directly related to management practices. Data was collected through questionnaire from a sample of 346 and 280 were properly filled and returned. Besides, Semi-structured interview were used to guide for the qualitative data collection tools. The data collected from the questionnaire were analyzed using SPSS version 20 statistical tools such as mean, standard deviation, and correlation and followed by interpretation. The result of the study indicates that most of the commercial banks give the same kind of service; the commitment of top management is very circuital for implementation of benchmarking. In addition to this management doing a lot with the strategic plan and controlling activities with respect to the company’s performance improvement and customer satisfaction. Moreover, the directives of NBE and the country infrastructure are the main obstacles for the implementation of benchmarking. However, some problems were also there; in human capital, continuous improvement, systematic, effective implementation, best practice and flexibility. Therefore, Ethiopian commercial banks need to give due attention for these problems, and preparing the best practice service and evaluating results.