Is Your Reporting Driving Your Business Forward?
Do you rely on informal communication, ad-hoc email updates and piece meal reports to track your firm’s progress?
It’s not uncommon. Over time, firms stop comparing like with like and lose the ability to refer to comparative data.
The most effective managers I work with see more opportunities and achieve greater performance through having data at their fingertips. They rarely refer to gut feel and never rely on hearsay or rumour to know what’s going on in their business.
We want to get you to the same point. You’ll know when you have achieved this when the RIGHT INFORMATION is being delivered to the RIGHT PERSON at the RIGHT TIME.
I am going to expand on my previous blog, What is a Management Control System? (MCS) to look at the reporting element of your management system. Reporting identifies the need for action and executing the action plan delivers results.
Formal Management Control Systems Define
WHAT we intend to do
HOW we are going to do it
PERFORMANCE is managed
PROBLEMS are identified and solved.
At the heart of the MCS, is the REVIEW MEETING. This is time set aside at regular intervals to meet with the team and rationally analyse what caused the variances during the execution of the plan using the facts and figures provided in your reporting tools.
We use number based key performance indicators, for example number of calls, number of orders taken, % conversion of calls to orders etc.
Key Measurement Points
Include these five points of measure for a meaningful report that enables you to be in control of your continuous improvement culture.
How we performed historically (your starting point)
This sets the stake in the ground for determining your existing performance levels. These may be against, for example, the same month last year or the average of the previous 12 months Mondays’ etc., depending on how your business volumes fluctuate. If you know where you’re starting from you’ll see by how much you’re improving (or deteriorating).
What we want to achieve, expectation (our end point).
Targets are normally set by the annual budgets or forecasts. But if, during the review meetings, the team has found a solution to a specific problem, or they have come up with an action plan to improve working methods or enhance skills, then the target may be based on the expectation of performance levels if these initiatives are implemented.
Making sure we plan to meet the target (how we will do it).
Plan the incremental steps to reach the target. Without a plan, there is no focus. Your team requires a direction of travel to reach the target. Plan training requirements, workflow changes, process changes or software updates that will help your team’s effectiveness.
The plan should reflect by how much the target can be approached, in milestones, as the changes are put into action.
Short Interval Control – Frequently recording where we are (how are we doing).
Ideally actual progress should be reported at frequencies that allow progress to be monitored and controlled early enough before it goes too far off plan. This can be hourly, daily, weekly etc. The control intervals you choose need to be proactive, and are dependent on the type of work being done.
A factory producing 1000’s of products an hour needs more monitoring more frequently than a software developer delivering a six month project.
Checking against the plan to see how much variance there is, and what needs to be done to close the gap
It is useful to show the variances either as percentage gain/loss against the plan, using the RAG traffic light system or even smiley or frowning emoticons. Anything that allows you to scan down the report and pick up on the exceptions that need to be addressed.
The Review Meeting
This is the HEART of the system, the Interpretation of Variances. There isn’t any rocket science here, remember the questions we all know: WHO WHAT WHERE WHY WHEN HOW.
Having implemented your reporting process, the most effective use of your time is to start managing by exception. That means not trying to fix everything, instead prioritising what you know is wrong (the quick wins), then focus on stretching and improving further
If the performance indicator target is not achieved then a variance has occurred in the system. It’s your responsibility to find out:
WHERE it has occurred
Identify WHAT needs to be done to remove or reduce the cause (the WHY)
Agree HOW the action required will be carried out, and
Agree WHO is responsible for carrying out the actions
By WHEN the action should be carried out
Overtime you will be able to QUANTIFY the impact of each change. Future reports will show TRENDS which indicate whether the agreed actions have a lasting impact.
If the actions improved the variation, then keep on doing it – BUILD IT INTO THE SYSTEM
If the variation was not improved by the action, look at other options – GO BACK TO THE WHY!
Use the IDEAL problem solving methodology in my earlier blog to determine how variances to the plan can be rectified.
Bringing Control To Your Management
Effective Reports and the Review Meetings allow you to make objective evaluations, and are the key to continuous improvement.
You will be able to see whether your plan achieved what you set out to do, and can make plans to do even better next time, no matter how small the incremental steps forward.
Objective reporting will allow you to confront the problems which caused your off schedule conditions. You will have identified causes and have a mechanism for agreeing actions to reduce or remove the cause.
In my experience, setting better plans leads to organisations not just fixing problems, but continually improving and achieving far more than they originally thought possible.
At the end of the day, the benefits to be gained from a robust reporting and review process far outweigh the costs of the extra effort and time involved in setting it all up, and getting people used to working in a more structured way. Once you’ve got the reporting and reviewing wheels in motion, you’ll wonder how you ever managed without them.
Your Next Steps to Greater Productivity
Alluxi is here to offer you support, bringing a facts and figures approach to evolve your business and realise your goals. As a first step towards identifying your current business challenges and evaluating where your future opportunities exist within your business, we invite you to complete the in-depth Alluxi Business Success Scorecard focussing on the 10 key areas of a successful business.
Take 15 minutes to respond to the scorecard and get your results within minutes. You’ll be invited to book a follow-up 1-2-1 Productivity to Profit Breakthrough Session to find out how you can implement rapid and measurable improvements.
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