CFO of an organization can face failure in management reporting in two cases. Either the reports are long filled with only data with no insights to drive actions or they are made in silos without consulting the other departments, for example, every department gives its own tally of credit and debit along with budget without providing a guiding view of the whole organization.
Better reporting is not just an improved report, but the process and procedures adopted in the reporting process. Management reporting should be focused on measuring elements having an effect on business performance. Following a business focused reports would help uncover multiple actionable insights.
Align the business objective
Having too many, too long, lack of relevant information brings complexity to management reporting. The management in order to make decisions based on reports needs to communicate the business objective which the company is trying to accomplish, to his team. The top management should set an example in reporting by self- depicting the desired behavior. Measuring the right elements, rewarding the performers, communicating the values to his team. Inculcate the reporting process which is most relevant to the company’s direction towards the future rather than precise and over-detailing of information.
Set your KPIs right
With the increasingly high amount of data available to the organizations, it is of high importance to measure the right performance indicators. Measuring irrelevant KPIs would make all the dashboards, reports and spreadsheets non-contributing to your business growth. When the KPIs reported are incorrect, management would request for more information while meeting to solve business problems, thereby delaying the decision making creating inefficiencies in the business operations.
Set the appropriate KPIs by understanding the business value drivers. KPIs not adding value to business needs to identified, removed and communicated to the team regarding the same. With the right KPIs, management can develop a shared understanding of the future course of action. However, with changing business environment, KPIs needs to change and effective system needs to in place for the transition.
A good bucket of KPIs should balance both quantifiable KPIs like sales, defect rates, ROI, Market share along with complementary KPIs like internal strengths, goals, shifting consumer trends and consumer feedback.
‘Too many cooks spoil the broth.’ With everyone doing everything, nothing is done. The fundamental directive in reporting management should be aligning the behavior with one’s responsibilities and objectives of the enterprise. Drive accountability in your reporting structure by clearly defining the roles and expectations of the employee, thereby holding him accountable for his work. Once the accountability is established, employees should be educated on how their responsibility affects business outcomes.
Effective communication is a challenge for companies. Misalignment of company values with employee values would bring divergence in activities performed by both of them. Communication can be improved by leveraging technologies for establishing a communication channel which is easily accessible.
Management reporting is a crucial functionality which enables decisions which derive the value to the organization. Use of technologies like VComply to improving management reporting has helped many organizations in improving business outcomes.
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