Management Dashboard: Concise KPIs & Better Decision Making
The management dashboard has become a hot business topic in recent years. In the same way that a car’s dashboard has gauges and lights that alert drivers to potential problems, a management dashboard can alert you to problems that might be lurking beneath the surface of your business.
A management dashboard provides a quick, at-a-glance view of the key performance indicators (KPIs) that are most relevant to your business. These may include financial ratios such as inventory turnover, debt-to-equity and accounts receivable and accounts payable days, as well as non-financial KPIs such as employee turnover, client retention and new customer acquisition.
Challenges with a Management Dashboard
Despite the many potential benefits of an executive dashboard, entrepreneurs and owners of mid-sized businesses sometimes face challenges when it comes to creating a successful dashboard initiative, including the following:
- Deciding which KPIs to dashboard. For your management dashboard initiative to be successful, you need to determine which KPIs you should be monitoring and measuring. You also need to decide how often these KPIs — and hence, your management dashboard itself — should be updated.
- Updating their systems. The underlying systems that feed that management dashboard need to be accurate and up to date.
- Building consensus among decision makers. There needs to be consensus among all parties to ensure that the data displayed on the executive dashboard is the data that the management team needs most.
- Ensuring underlying knowledge. There needs to be an underlying knowledge of the core facts behind the dashboard data for management to use the data effectively.
Your business could experience negative impacts if you fail to overcome these challenges, including the following:
- The accumulation of inaccurate data. Remember: Bad data is worse than no data at all. The rush to provide dashboard information should not supersede the requirement that the underlying data is accurate. Management needs to have assurance that dashboard information provided by the finance department is both current and accurate.
- Misunderstandings among decision makers. All parties need to have a common understanding about which KPIs are being monitored and measured and how frequently they will be updated.
- Frustration among members of the management team. A lack of agreement about monitoring and measuring KPIs can lead to discord and frustration among managers and key executives.
How Project CFO or Part-Time CFO Can Help
One way to overcome these challenges and implement a successful dashboard initiative is to work with a CFO services partner. This high-level financial professional will have worked with many other entrepreneurs and middle-market CEOs to help them with a management dashboard and KPIs.
Your company could realize multiple benefits by bringing in a part-time CFO or a project CFO to help you create a management dashboard. For example, the CFO partner will:
- Work with your management team to gain consensus in terms of the KPIs that will be monitored and the specific data the dashboard will provide.
- Help guide the management team in terms of the data they need from the dashboard to achieve strategic and operational goals.
- Understand your financial systems to clearly define what is possible in terms of the information contained on the dashboard.
- Ensure that there is an understanding by all decision makers and management team members about what the dashboard information means — or in other words, what’s “behind the numbers.”
Hiring an outsourced CFO services provider to help you with dashboarding can result in significant positive outcomes for your company, including the following:
- The management team will have a tool that will help them achieve the company’s strategic and operational goals.
- The finance team will gain a greater understanding of the data management needs and become more in tune with their requirements.
- Management will no longer need to wait for the monthly close before understanding what’s going on within the company from a financial standpoint.
- Having a management dashboard in place can help drive the finance department to upgrade their own performance and practices.
The management dashboard has become a hot business topic in recent years. A management dashboard provides a quick, at-a-glance view of the key performance indicators (KPIs) that are most relevant to your business.
Despite the many potential benefits of dashboarding, entrepreneurs and owners of mid-sized businesses sometimes face challenges when it comes to creating a management dashboard.
Bringing in an on-demand CFO with a singular focus on the management dashboard initiative will help overcome challenges and complete the implementation successfully and efficiently.
Mark S. Becker, Partner, CFO Edge, LLC