A monthly management meeting is the ideal time for the senior business leaders to get together to discuss and provide insight on the performance of the organisation in the previous period, but also to discuss plans to build on strong performance or mitigate and turn around weak performance. Monthly management reports are an excellent tool for the business to monitor its performance to the plans which have been set. Many people think of the monthly report as being primarily driven by the financial performance but it is a huge opportunity to holistically look at the business on a regular basis and ensure it is on the right track. Some of the benefits of robust management reporting are below:
I’m a big believer that there is little point in having all the information required to run the business if it isn’t communicated to the people who need it. The financial aspects of management reporting can provide guidance of where to focus effort in terms of understanding variances and trends which are affecting the business. For example, Revenue may be down for a particular product and it could simply be that a vital piece of machinery had a breakdown which led to delays in the production runs. The drop in Revenue would have given the indication that there may have been an issue in the period and further investigation highlight the reason why. This could lead to an improvement in that area of the business in terms of planned maintenance to ensure that the equipment is running at optimum capacity. This is just one example.
Better Planning & Forecasting
While historic data isn’t always an indication of future performance, the trends which can be gleaned from the information can provide a good starting point in terms of the foundation of budgets and forecasts, Outside of the realm of finance, having an understanding from the Business Development team of the pipeline of work can lead to better assessments of areas such as staffing requirements in the coming months. While this would lead into the financial plans it also means that HR can strategically plan its recruitment and retention strategies accordingly, production can calculate its materials requirements on a period by period basis leading to procurement being able to plan with suppliers around lead times and availability.
Timeliness in Control and Evaluation
By producing regular reports and meeting to discuss them any issues which may arise are managed on a more regular basis and the impact can be minimised. This process should not replace the ability to discuss urgent matters as and when they arise but should be used to analyse the higher level performance of the business and which areas need closer attention. By being able to manage issues fairly soon after they have occurred then the management team can ensure that they are dealt with promptly and effectively and not allow them to keep having a negative impact. Conversely, positive issues can be quickly reinforced and the benefit to the business can be maximised quickly.
Management reports do not need to resemble War & Peace in terms of their length and level of complexity. They should be useful, clear, relevant, accurate & timely. By doing so you are ensuring that the target audience is getting the information they need, in the manner they need it, in relation to the duties they have to the organisation, can have confidence in the information they are being provided and are receiving it quickly enough to decide on the correct course of action to take, both positive and negative.
Having all the information is great but without the necessary follow up action, greatly reduces the value of having it. The management reporting itself will not make the organisation more efficient and effective, but it will give you the necessary pointers as to where to focus effort in both the short and long term. Items such as the Balanced Scorecard can give a good all round view of the business from more than just a financial perspective but the measures used are just that, measures. You have to use them to determine where your efforts are best directed.
An analogy I like to use is that it is all well and good knowing the atomic weight of a tin of beans but pretty worthless if you don’t know how to open it when you’re starving.