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The performance measurement system reflects the corporate strategy and overall business objectives of an organization. The alignment of the performance indicators with the company's critical operating factors, and the processes having bottle‐necks alongside the value chain, could result in a very compact, target‐oriented, and quality‐based performance measurement system. This paper aims to investigate this issue.

The quality‐based performance measurement system is developed by integrating the existing performance indicators of an organization with those of best‐in‐class management practices. The organizational processes included range from business leadership to the operational level. The key performance indicators (KPIs) depict the existing status transparently and comprehensively, whereas later on they can be used to control the processes with the pre‐defined values/measures. The KPIs of a process are documented and standardized once they are implemented. An action plan is then developed to write down the prerequisite for the new KPIs and to prioritize the existing ones for the sake of improvement.

It is affirmed that most of the employees had found the performance measurement system a very useful tool to tightly control the flow of their processes. It is very important to mention that this system does not mean giving way to another flood of information; instead it is designed to support the company's decision‐making process through target‐oriented indicators that could be compared with the existing best practices.

The concept described is aimed at developing and implementing a quality‐based performance measurement system within an organization. This system is developed through comparing the existing organizational practices with those having been labelled “Best‐in‐class” and it provides an alternative to the Balanced Score Card approach.

By analyzing and comparing industry and business best practice, processes can be optimized and become more successful mainly because efficiency and competitiveness increase. This paper aims to focus on some examples.

Case studies are used to show knowledge exchange in the pharmaceutical industry. Best practice solutions were identified in two companies using a benchmarking method and five‐stage model.

Despite large administrations, there is much potential regarding business process organization. This project makes it possible for participants to fully understand their business processes. The benchmarking method gives an opportunity to critically analyze value chains (a string of companies or players working together to satisfy market demands for a special product).

Knowledge exchange is interesting for companies that like to be global players. Benchmarking supports information exchange and improves competitive ability between different enterprises. Findings suggest that the five‐stage model improves efficiency and effectiveness. Furthermore, the model increases the chances for reaching targets. The method gives security to partners that did not have benchmarking experience.

The study identifies new quality management procedures. Process management and especially benchmarking is shown to support pharmaceutical industry improvements.