Report generation

 

Once the measurement process is finished, the first question that needs to be asked is: “What it is going to happen with the collected data? In general, an analyses of the data takes place, some reports are generated which are communicated, and afterwards, ideally, decisions must be taken based on these reports. This process of creating and distributing information is designed to provide the vehicle for understanding results and trigger discussions and debate on possible solutions in order to improve the areas were targets are not met. (National Performance Management Advisory Commission, 2010)

 

Frequency and level of reporting

Communicating performance measurement information and results is one of the most important parts of the Balanced Scorecard managing process. (National Performance Management Advisory Commission, 2010). The audiences targeted include both internal staff such as employee, management and executives, as well as external interest groups, such as shareholders or elected officials.

 

Balanced Scorecard reporting can be done at different organizational levels and within different functional areas. According with the type of activity performed and the importance of those activities for the organizational strategic focus, Balanced Scorecard reporting can vary consistently from daily, to weekly, monthly or even quarterly reporting. While for some operational activities reporting must be performed weekly or even daily, the performance of functional areas such as Marketing or Finance is usually reported monthly. In cases such as the R&D department, where to see results of the work in innovation and products development might take time, reporting can occur on quarterly bases. No matter of the parties involved in the reporting process, or the reporting frequency, one of the most important performance reporting characteristics are efficiency and effectiveness.

 

Efficient and effective reporting

Unless a streamlined and efficient reporting (communication) system is in place, collecting data and measuring performance will not yield any significant results or generate any positive impact for the organization. Efficient and effective communication requires more than putting together the collected data and analyzing it in a report. Efficient and effective communication requires that the target audience has access and understands the information contained in the data reported (NNPMAC, 2010). An efficient and effective Balanced Scorecard communication and reporting system requires for several criteria to be met.

  • Access to organisational performance management reports is available to the majority of employees
  • Organisational performance management reports are disseminated through direct meetings across the majority of the functional area in the organization.
  • There is frequent interactivity and positive dialogue about performance management among staff in the organization.
  • Performance data is consolidated in a data warehouse / data mart - there is no utilisation of standalone systems.
  • The organisation has continuous, real time reporting around a series of critical processes such as customer management, product/service performance, supply chain, operations.
  • Variance reporting alerts are automatically generated. (Brudan, 2009)

 

Communicating performance information to the organization

Generally, one performs an activity in order to use the results for future decision making. Unfortunately, in many organizations, the performance measurement reports are communicated only to senior managers, and not in depth discussions are taking place within the lower layers in the organizations. Thus, no initiatives result, which can be enacted in order to solve possible issues that appear in the reports. This is because too much emphasize is put on assembling the reports and not enough on the decisions that must be taken in order to solve the identified problems and allow the organization to benefit from the learning and improvement process.

 

While doing a Balanced Scorecard research report for the Chartered Institute of Management Accountants, Mackay (2005) found out that many organizations did not distribute management information to all employees. According to its findings, on average less than 50% of information was available to all employees; more than 50% was available to all managers, while 8% of the respondents stated that none of the information in the performance management system was available to all managers. Thus, the final research results showed that whilst most organizations had a formal performance management reporting system, the degree of transparency was variable. Despite the fact that many of the organization recognized the value brought by the Balanced Scorecard reporting system, for improving the communication process, the resources dedicated for this activity varied consistently.

 

To have an impact on the improvement of the organizational performance, Balanced Scorecard reporting must be nurtured as a transparent and critical process.

 

References

  • Brudan, A. (2009), Performance Management Maturity Level in Business Organizations, Master thesis, Aarhus School of Business, Denmark.
  • Mackay, A. (2005), A Practitioner’s Guide to the Balanced Scorecard, Research Report for The Chartered Institute of Management Accountants.
  • National Performance Management Advisory Commission (2010), A Performance Management Framework for State and Local Government: from measuring and reporting to management and improvement.

BSC system : Usage

 

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