Interpreting the monthly report can be one of the most daunting
tasks a manager has to undertake. Every month reams of data, rows and
columns, charts and graphs appear providing what purports to be the
monthly status. The problem is, most of the time all of the effort that
has gone into producing the report has been undertaken by someone else.
the responsibility is given to someone in the finance department who
has a highly focused view of the business world. They are interested in
the company numbers, everything from sales through revenue to operating
costs and profit. These are of course very important, but they do not
tell the whole story. Just taking this information and presenting it to
management will not enable the executive team to make the right
decisions to take the business forward.
The problem, however,
rarely lies with the finance operative who has been given the task of
producing the report. That person is simply trying to make sense of the
requirement based on his or her view of the world. No, the problem
actually lies with the management team that are asking for the
information in the first place. They, more often than not, have asked
for a report based on the things that the company measures and not on
what the company is trying to achieve.
The monthly report should
be based on company goals and objectives. That is, the things that the
company wants to achieve, not what they have achieved (the measures). So
the first step is to set the goals and objectives. It is here where a
KPI Dashboard (Key Performance Indicator Dashboard) can be very helpful.
software today has become very sophisticated and often provides
automated guides that take the user through the process of setting up
the system. Using the benefit of years and years of culminated knowledge
on the subject of business performance management, the system can take
the user through a step-by-step approach often starting with company
The KPI Dashboard is a key component that forces
the users to think about how they want to display information in a way
that is Clear and meaningful and Provides a mechanism to drill-down to
further detail if and when required. It is not unusual for organisations
to start with a Strategy Map. A strategy map can be created using one
of several methodologies but the defect standard tends to be the
The Balanced Scorecard starts with the premise
that as well as financial objectives and measures a company management
team needs to think about objectives and measures from three other areas
that they call Perspectives. So as well as the Financial Perspective
there are Customer, Internal Processes and Capacity/Leaning and Growth
Perspectives as well. By forcing management to think about these other
areas provided the 'Balance' in the balanced scorecard.
typically, you might see Objectives like 'Increase Customer
Satisfaction' in the Customer Perspective or 'Improve Accounting
Process' in the Internal Processes Perspective or 'Improve Safety
Training' in the Capacity/learning and Growth Perspective. By forcing
management to think about objectives other than financial, a more
holistic picture of the business can be built. This is turn can be
described in a KPI dashboard together with the associated measures.
key here is to force management into a new way of thinking. To move
them away from a simplistic approach that relies on the interpretation
of financial data presented in spreadsheets towards a more holistic
business view. KPI Dashboards force this behaviour. By structuring the
activities through a pre-dined process that is built into the software,
the management team get the advantage of decades of intelligence around
the whole subject of business performance management.
Working as a consultant in the area of strategic planning and the
use of the balanced scorecard. Software automation is central to good
strategic planning and should be a core business tool in today's highly
competitive environment. Check out Intrafocus Limited at http://www.intrafocus.com.
They specialise in strategic planning software, balanced scorecard
software and KPI software. They also provide professional certification
classes for the Balanced Scorecard methodology.