Leveraging Greater Value From Business Reporting

Tuesday 19 January, 2010

by John Cleary

To understand why business reporting is an issue, do a postage stamp calculation of the number of reports being produced and the staff time and effort required to produce them.

How important is business reporting?

It is essential. Measurement managed organisations are more successful because they measure and report on what is important, to whom it is important to, and the recipient takes action to improve performance.

What do you mean when you say 'report what what is important to whom it is important to'?

Reports should impact what is done and how it is done to improve performance. Unless a report is simply for monitoring purposes, it is important that it initiates action to improve performance. Otherwise, question their value and the resources used in producing them.
Reports are a communication and to be effective, it is important that both parties are on the same page. That is, looking at the issue from a common perspective. This is an untested assumption in many cases and it is dangerous for it to remain untested.

Is there a lot of waste in business reporting?

Anecdotally yes. The real test is performance improvement as a result of action initiated by a report. That is, how management effort is driven by business intelligence, arising from report interpretation, to improve performance. Inevitably some reports will not meet their objectives. A report may no longer be relevant due to the changed circumstance since it was initiated. Other reports will lack relevance because recipients understand them to be solely for information purposes. As a result, they do not use the report to guide action to improve performance.

Must reports always initiate action?

Organisations have both monitoring and action reports. Monitoring is reporting on what is and, while important, the real value in business reports is when they initiate collaborative action to improve performance. Action reports are those intended to guide management effort and should represent the overwhelming percentage of all reports produced.

How do organisations identify what is important to measure and report?

The strategic planning process should identify Critical Success Factors (CSF) and the Key Performance Indicators (KPI) for those CSFs.

Why do an organisational review of current reporting?

Things evolve in organisations but seldom the way they would if they were planned. Process improvement is increasingly accepted as a way to add value. An organisational review of current reporting will lead to process and performance improvement.
Outcomes of the review will include:

• Abandoning, tailoring or developing reports to better leverage their value
  
• Improving the dialogue between authors and reporters
  
• Better integration across the organisation
  
• Continuous improvement in performance by better leveraging business reports
  
• Development of an action bias for performance improvement

When are reports most likely to be low value?

1. When done as a task rather than to achieve a specific outcome
   
2. When the language is not easily understood or able to be interpreted
   
3. When the focus is too narrow and conclusions undermine the value chain
   
4. When recipients fail to action reports with the potential to improve performance

Are financial reports more likely to be of low value?

Not necessarily. It may be the case in an organisation that has few staff, particularly senior staff, with financial skills or a financial background. It is not the case when senior staff have good business acumen and financial analysis skills. Both can be taught.
If report recipients are open to learning and seek to use an Accountant’s expertise to build their business acumen and financial analysis skills it is a great opportunity for both to learn from one another while improving performance and team work.

What are the benefits of leveraging greater value from business reporting?

1. Valuable staff time is freed for value-adding work up by streamlining reporting
   
2. Non value-adding work is eliminated by ceasing unnecessary reporting
   
3. Value-adding work is increased because reports initiate action to improve performance
   
4. Collaborative effort is improved across the organisation by breaking down silos
   
5. Thinking on CSFs and KPIs is refined to improve performance
   
6. Continuous improvement becomes increasingly part of organisational culture

Author Credits

John Cleary is the Managing Director of the Blue Chip Consulting Group www.bluechipconsultinggroup.com.au incorporating Cost Management Specialists www.costms.com.au. John's work bridges the finance and human resource functions in a business by building the capability and motivation of staff to add value by improving performance measures. John has a national and international client base and can be contacted on 0411 522 521 or at ceo@bluechipconsultinggroup.com.au. 

 

 

Source:ceoonline.com