An entrepreneur running a small
company knows what to keep tabs
on while running the business. As a
company gets larger, it becomes more
important that the department heads
start reporting on these functions so
upper management can have a glimpse
at those metrics that keep a business
successful. This is where having an
executive dashboard in place can keep
CEOs and their business on track.
“It’s important not only to track history
to see where the trends have been, but,
more importantly, a dashboard should
help you predict and/or positively alter
the future,” says Bill Dvorak, Chief
Financial Officer with CIMCO Communications. “When you’re looking at the
dashboard, you can understand the history and can help determine what direction your business is heading based on
those quantitative metrics.”
Smart Business learned more from
Dvorak about the benefits of setting up
an executive dashboard.
What should a dashboard measure?
It’s the barometer of how the business
is doing, monitoring the key areas that
you want to watch as you review the
business operations. The dashboard
should be pulled together by functional
department and it ought to include the
crucial items being measured in each
department to judge performance.
For example, sales results for the vast
majority of companies would be a
department you want to be watching
very carefully. To be most effective, you
also want to have predictors, such as
sales department activities.
Every item in the dashboard ought to
be a mutually agreed upon set of metrics
by senior management and the functional department heads. Overall, you should
measure the areas that are most critical
to meeting your business goals.
What information may be gleaned from a
dashboard?
A dashboard lets you look for variances, either positive or negative, against expected results. If you had a
customer satisfaction score that you
were watching, for instance, and you
started seeing it decline, the dashboard
would give you the opportunity to investigate and react before customer churn
got out of hand. Or, if you see the number of quotes in the sales funnels
decreasing, you can address issues in
the sales department before your annual
revenue projections get seriously off
track.
How should it appear to the user?
In my opinion, a dashboard should fit
on a sheet of paper or on one computer
screen. A true dashboard is similar to
what’s in a car — it’s something you can
just look at and pick out key elements.
There ought to be a simple way of flagging problems and seeing things that are
out of line.
The reports themselves should be intuitive. You want it to be easy for the readers to glean out the information that is
pertinent to them. The trends should be
clear so that variations jump off the page.
What are the benefits of having a dashboard in place?
There are a number of areas where a
dashboard can positively affect the success of an organization. I believe that
most people want to do a good job and
they want to be appreciated for the job
that they’re doing. When lacking metrics,
senior management tends to pounce on
the things that go wrong, but there’s very
little positive reinforcement for the
things that are going well. If you have a
good set of metrics, it’s pretty easy to
identify those metrics and send out a
note or give recognition to those people
that are performing at a high level.
If you’re asking employees to measure
results, then they know it is critical to
the business and it reinforces the importance of their work. It also sets clear
expectations. If you expect a customer
satisfaction score, for instance, to be a
certain number, employees know how
they have to perform to meet those
goals.
How can a dashboard be set up?
If you start with the core assumption
that the areas being measured are important to running a department, division or
a company, then the information better
be readily available. It’s a matter of finding an easy tool to accumulate the information and putting a process in place to
manage it. There are software packages
that allow you to input metrics into a
financial system. However, if you need
to start simply, you certainly could do it
on an Excel spreadsheet.
One of the biggest challenges can be
accuracy of measurement due to quality
of data. So start with the metrics you
can get easily and then work on the
harder ones. When you begin to see the
trends in the data, it will help clarify the
other areas of improvement. Most
importantly, your dashboard will be providing a clear, honest look at your business performance.
BILL DVORAK is the Chief Financial Officer of CIMCO Communications. Reach him at (630) 691-8080 or [email protected].
