Management Dashboard: Is it of Value?

A management dashboard informs executive management on Dashboard 12.13 5the state of the business and, when necessary, report alerts on key production, sales, quality, revenue or profit performance so that timely and accurate decisions can be made in running the business.  This type of management tool is fundamental to the running of any high performing business. Surprisingly, many businesses operate without even an elementary management dashboard.

Why is this?
If the dashboard provides a regular (daily, weekly, monthly) detail snapshot of the business why don’t more business leaders commit to their development and implementation into their management practices? The following lists a few reasons I most often hear when I ask about the absence of a dashboard in running the business.

  • Sensitivity over revealing internal information, even to a key management team, that might be leaked to a competitor.
  • Company data and accounting systems have not been organized to report meaningful data.
  • Owners that feel they are in touch with the business and do not need a lot of data.
  • Belief that the effort is not worth it to report and collect data that might not be accurate or timely.
  • Poor or inconsistent business processes that make it difficult to measure and report meaningful information.
  • Inability to identify KPI (Key Performance Indicators) or metrics to report actual performance versus goal.

While the reasons vary, owners and management teams resist the use of dashboards to monitor business activity.   The management tools in use are either out of date when produced (i.e. financial reports published 15 to 20 days after the end of the previous month) or are not aligned with the operating units of the company or corresponding lines of management control.

The initial construction of a management dashboard (or scorecard) is fairly easy.  It is not necessary to have a Tier I Integrated Business System (i.e. Oracle, SAP) in order to have a dashboard.  What is important is identifying the critical points (Key Performance Indicators or KPI’s) in the business that need to be monitored to determine if the business process is on track to meets its goals.  While goals are valuable, it may be necessary to track data for a period of time before goals for a particular function or process are set.

Timely information is fundamental to accurate reporting of performance.  Consequently, it is important to know how and on what cycle data is collected for a process in order to understand its value and significance.  A process monitored on a dashboard may not be valuable if the data represented is out of sync with other data on the dashboard or is substantially tardy in being reported and therefore is not reporting a “current” position of the process.

If you do not use a dashboard today ask yourself why.  Begin with your most difficult or significant metric (inventory, profitability, sales, quality, etc.) and measure it then ask questions about what you observe.  Improve and expand your data collection until you are satisfied you are getting good information and making better decisions.  Now extend what you have learned to the next most important metric and so on.

Dashboards can be as simple as a hand drawn chart updated at periodic intervals at a workstation or an excel spreadsheet with daily production attainment versus goal for each production work center. Those companies that choose to use spreadsheets, establish a data collection cycle for key metrics that are then published on paper or updated in a central network location for online access by responsible managers.

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Graphing dashboard data is an effective means of revealing trends or changes in composition.  While some people can detect trends in a column or row of numbers, many find this very difficult.  Using a visual representation of the data can help reduce the mystery of a number centric spreadsheet.  While spreadsheets can be altered to reveal exceptions, they may be more evident in a visual format.

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A challenge for many companies that have a mix of products and services with different product margins and demand on delivery resources is to monitor the product mix being processed to see if it meets or exceeds the goal.  A shift in product mix either at order entry or, hopefully, early on in the order pipeline will alert the management team to a potential shift in margin that may threaten profitability goals or result in unexpected demand for critical machine and or labor resources that may result in schedule delays.

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If your business has an integrated business system and collects system data for business information (BI) purposes then you are probably a good candidate for a more sophisticated dashboard environment.  This would allow you to drill down from top-level data to the lowest level data component.  These tools do not come without significant cost and effort but often provide tremendous returns on investment if designed and used properly.

Where you can align people, at all levels in the organization, with the data that they influence you have the best opportunity to establish one-on-one accountability and a higher level of productivity and optimum performance.

Dashboard Benefits
Instituting a dashboard discipline in your business will instill a new approach to operating your business for you and your management team.  Here are a number of benefits:

  • Replace opinion or gut feel with actual levels of performance.
  • Tightens the loop between process and metrics.
  • Causes the management and principle professionals of the company to identify critical points in the business to monitor and gain insight to the true performance of the business.
  • Improves the ability to evaluate management and department performance.
  • Reduces managerial politics and subjective evaluation when identifying true performance.
  • Delivers performance data instead of expecting managers to research and create the same data.
  • Allows the business to be bench marked against competition and for improvements to be designed to address problems areas.

Bottom Line
Dashboards by themselves have no value if not used correctly by the organization.  They require attention to make sure they are reporting the right information for the current condition of the business and competitive circumstances.  Having a dashboard, just to have a dashboard, is a wasted effort if it is not used correctly or if it does not reflect the important elements of the business.

A leadership team in a highly competitive market today needs a dashboard paradigm in order to be highly effective and out perform competitors.  Market leaders not only have highly competitive products, professional staff and high technology delivery systems but also an exceptional command of the use of their business data in managing their operations and customer relationships.

A well-constructed dashboard is the stethoscope for your business.  A more complex dashboard system can give you an even greater level of granularity and insight into what is going on and what needs attention in your business.

I sense some owners and executives feel the numbers (or graphs) are controlling and “unfair”. Where I have witnessed a dashboards’ effective use, the leadership team uses the information to be more informed, to make faster and better decisions. The end result:  operating a more profitable business that meets or exceeds customer expectations.

The integration of a dashboard into your management process will surprise you with what you learn and the impact it will have on the business.  Your management team will become more informed and have a closer relationship with what is going on.  Real performance will not be bluster or subjective opinion but based on fact.

Be an informed executive and use a dashboard as a key tool in running a more efficient, profitable and competitive business.

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