SECTION: FINANCE

310110125 Creating a financial dashboard system for reporting and management purposes

Published: 01.10.2012 |
Last Updated: 14.11.2012
carmichael
carmichael
Stephen Kinsella

Stephen Kinsella is a Senior Manager in PwC's Advisory Consulting practice.  Stephen is a Chartered Accountant working in the Financial Effectiveness team and has over 13 year’s professional experience providing a range of advisory services to clients.  Stephen's areas of...

A dashboard is a collection of individual key performance indicators (“KPIs”) that collectively provide a balanced view of overall organisation performance. These KPIs are usually a measurement of performance against peers or against a pre-determined benchmark or target. A dashboard is an effective way to present information in a clear and understandable way, providing management, who have responsibility for the running and governance of a charity, with objective insight into those strategic issues not performing in accordance with plan. 

Effective dashboards

To be effective a dashboard must be:

  •  relevant  - KPIs are aligned with the strategic direction of the charity
  •  intuitive   - thoughtfully laid out and easy to navigate
  •  comprehensive - information from multiple sources in one place
  •  timely   - monthly/quarterly reporting

The benefits to be achieved from the use of dashboards include:

  •  information available in one place
  •  focused reporting of issues requiring immediate attention
  •  improved oversight by CEO and the Board
  •  enhanced board effectiveness
  •  stimulate discussion and inter-action between the board and management

Creating a dashboard

To be effective, the dashboard must reflect those indicators which are most appropriate for the charity.  Care needs to be taken in setting these indicators, so that the indicators are not too wide ranging and are sufficiently deep to identify positive and negative trends.  Charities should monitor the few relevant measures where the charity has the greatest degree of accountability and ability to improve.  Boards should be involved in the design of dashboards.

The key indicators being monitored should be aligned with the strategic plan. For effective management, it is recommended that the executive dashboard only have 8 – 10 measures. These measures should then be cascaded down through the organisation, ensuring the individual objectives of each function within the charity are aligned to the overall strategic goals.

The dashboard should not just focus on financial indicators but also those non-financial indicators which measure the overall performance of the charity. Possible indicators include:

  •  indicators of financial performance (income trends, margins, profitability, daily cash flow, days in accounts receivable, financial position)
  • indicators of operational performance (occupancy levels, length of stay, service mix)
  •  human resources (staff turnover, absences, vacancies)
  •  quality indicators (client satisfaction, incident reports, near misses)
  •  fund-raising (trends, targets, donor age, new fundraising opportunities)
  • Volunteer (trends, vacancies, screening, training, available hours).

It is important that collecting information for reporting purposes does not become an industry of itself and practical approaches need to be agreed to balance value with effort.

The indicators to be monitored should be set at a high level, providing measures of overarching performance.  They should be clearly defined and explained.  Individual indicators may cover a number of projects or initiatives.  The dashboard should be set up in such a way that users can easily access the definition of the key indicator and link to more detail on specific indicators.

The dashboard must not only focus on internal activity and results but should also monitor and report on external issues (e.g. sectoral developments, Government policy, funding sources, grant initiatives).

Likewise, the dashboard should also focus on past, current and future performance, highlighting trends which can provide users with valuable, actionable information. 

The colour coding of KPI dashboards enable management quickly focus on those areas requiring most attention. Typically Red signifies the need for immediate action; Amber signifies a slight negative variance from target, thus requiring attention; and Green signifies performance is either on or better than target. This colour coding is often referred to as a ‘RAG’ rating.

Conclusion

In the current shifting economic and political environment, charities need to react quickly.  Pressure to improve quality and to be open and transparent in reporting means information needs to be reliable and readily accessible.  The use of dashboards facilitates charities to achieve this and facilitates boards to probe deeply into areas where quality and performance can be improved.

 

SECTION 4: FINANCE

310110125 Creating a financial dashboard system for reporting and management purposes

Published: 01.10.2012 |
Last Updated: 14.11.2012
carmichael
carmichael
Stephen Kinsella

Stephen Kinsella is a Senior Manager in PwC's Advisory Consulting practice.  Stephen is a Chartered Accountant working in the Financial Effectiveness team and has over 13 year’s professional experience providing a range of advisory services to clients.  Stephen's areas of...

A dashboard is a collection of individual key performance indicators (“KPIs”) that collectively provide a balanced view of overall organisation performance. These KPIs are usually a measurement of performance against peers or against a pre-determined benchmark or target. A dashboard is an effective way to present information in a clear and understandable way, providing management, who have responsibility for the running and governance of a charity, with objective insight into those strategic issues not performing in accordance with plan. 

Effective dashboards

To be effective a dashboard must be:

  •  relevant  - KPIs are aligned with the strategic direction of the charity
  •  intuitive   - thoughtfully laid out and easy to navigate
  •  comprehensive - information from multiple sources in one place
  •  timely   - monthly/quarterly reporting

The benefits to be achieved from the use of dashboards include:

  •  information available in one place
  •  focused reporting of issues requiring immediate attention
  •  improved oversight by CEO and the Board
  •  enhanced board effectiveness
  •  stimulate discussion and inter-action between the board and management

Creating a dashboard

To be effective, the dashboard must reflect those indicators which are most appropriate for the charity.  Care needs to be taken in setting these indicators, so that the indicators are not too wide ranging and are sufficiently deep to identify positive and negative trends.  Charities should monitor the few relevant measures where the charity has the greatest degree of accountability and ability to improve.  Boards should be involved in the design of dashboards.

The key indicators being monitored should be aligned with the strategic plan. For effective management, it is recommended that the executive dashboard only have 8 – 10 measures. These measures should then be cascaded down through the organisation, ensuring the individual objectives of each function within the charity are aligned to the overall strategic goals.

The dashboard should not just focus on financial indicators but also those non-financial indicators which measure the overall performance of the charity. Possible indicators include:

  •  indicators of financial performance (income trends, margins, profitability, daily cash flow, days in accounts receivable, financial position)
  • indicators of operational performance (occupancy levels, length of stay, service mix)
  •  human resources (staff turnover, absences, vacancies)
  •  quality indicators (client satisfaction, incident reports, near misses)
  •  fund-raising (trends, targets, donor age, new fundraising opportunities)
  • Volunteer (trends, vacancies, screening, training, available hours).

It is important that collecting information for reporting purposes does not become an industry of itself and practical approaches need to be agreed to balance value with effort.

The indicators to be monitored should be set at a high level, providing measures of overarching performance.  They should be clearly defined and explained.  Individual indicators may cover a number of projects or initiatives.  The dashboard should be set up in such a way that users can easily access the definition of the key indicator and link to more detail on specific indicators.

The dashboard must not only focus on internal activity and results but should also monitor and report on external issues (e.g. sectoral developments, Government policy, funding sources, grant initiatives).

Likewise, the dashboard should also focus on past, current and future performance, highlighting trends which can provide users with valuable, actionable information. 

The colour coding of KPI dashboards enable management quickly focus on those areas requiring most attention. Typically Red signifies the need for immediate action; Amber signifies a slight negative variance from target, thus requiring attention; and Green signifies performance is either on or better than target. This colour coding is often referred to as a ‘RAG’ rating.

Conclusion

In the current shifting economic and political environment, charities need to react quickly.  Pressure to improve quality and to be open and transparent in reporting means information needs to be reliable and readily accessible.  The use of dashboards facilitates charities to achieve this and facilitates boards to probe deeply into areas where quality and performance can be improved.