Best practice in business requires focus on the right measures, to help drive the right behaviours in optimising long term performance and risk management.
It is also about getting the balance right, allowing managers to manage, and get report only on what matters. Otherwise, eliminate administrative burdens.
Driving performance requires a focus on few key indicators, many being non-financial and risk focused. There is a need to eliminate discussions solely around profit and loss variances and irregular, bureaucratically driven, risk register reviews. These activities lack effectiveness and timeliness. Managing a business with the right indicators allows the profit and loss statement to take a secondary position, allowing the monthly management discussion to focus on the key indicators of substance that underpin performance.
- An example of the business unit management reporting used at a well-known organisation is illustrated. They lead their peers in performance.
- The reporting framework incorporates key “balanced scorecard” indicators, financial reporting, risk and project management into its monthly reporting cycle.
- Every business unit (over thirty of them), receives the core information on their electronic “dash board”, within one day of month end.
- Responses from all business unit management come back in, electronically, for review by senior management and form the basis for the consolidated board reporting within four days of month end.
- 18 month rolling forecasts are also updated every month, electronically. The rolling forecasts have almost made the yearly budgeting cycle irrelevant.
- All the data is reliably given, there is only one version of the truth.
- The process is not administratively burdensome for facility management. A facility that is meeting or exceeding expectations would take half an hour to report on.
- Any administration burdens “out of the ordinary” are effectively necessary management, where risks are appearing or targets are not being met.