Most managers know that the words "Dashboard" or "Control Board" (hereinafter abbreviated TC) are used to refer to management information systems whose purpose is to help decision-making. Proper use of gauges allows better control, planning and driving.
performance-management-the-10-steps-to-build itBooks and seminars on the subject abound. However, the steps to implement it are not always clear. As "an example is worth a thousand words", the main stages followed in an SME company during 1999 will be described here. Books and sources of information on the Internet will be mentioned where the interested person can expand the subject.
The stages have been grouped into four phases:
- Design orientation Indicator architecture Computing Use.
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DESIGN ORIENTATION
STAGE I. COMPANY, BUSINESS, FORMULA FOR SUCCESS
In the selection of management control indicators, the nature of the company influences (a bank is not the same as a company that manufactures food), the key factors of success in the business (in some it will be the price, in others the customer service customer) and the strategy you follow to triumph over the competition.
The company in the example is an Argentine SME that produces XX products for mass consumption, which it sells to supermarkets and retailers. If the reader needs to imagine some type of product, consider that the example could be that of a company that manufactured and sold garden products (scissors and others), kitchen furniture or regional sweets.
In this case:
- View
Leading the Argentine market in XX type products.
- Definition of the Business Customers: supermarkets and businesses that buy more than 100 units per month Products: products comparable to the best in the world, with special details required by the local market.
- Objectives Return on investment before taxes: 20% Market share: more than 50%
- Strategy Concentration on products and customers Innovation, quality, speed of delivery, service
STAGE II. THE MANAGERS AND THE CONCEPTS OF MANAGEMENT
According to the level that the managers are at, they have different types of problems and decisions to make (at a high level a general inventory policy will be defined, at an intermediate level the amount of inventory per product group will be defined and at a low level when to compare each item.).
The indicators, then, will vary by level. Your selection is influenced by the personal goals of managers, their driving styles, and their views on how best to run a business.
The novelties and advances in management theory suggest new indicators (non-quality costs, customer service, etc.). The competitive situation of the company indicates a certain need for indicators (a company in crisis will monitor its indebtedness).
The nature of the context also plays a role. At the time of hyperinflation, we saw the flow of funds daily, in which there was a shortage, more supply indicators were monitored than at present
In the company of the example there are:
- Managers who know and adhere to new management concepts Decentralized management, pressure for results, a high proportion of remuneration is
The managerial decisions required are: rapid reaction to competition in prices and products. Fast delivery and customer service.
INDICATORS ARCHITECTURE
STAGE III. THE DASHBOARD FOR SENIOR MANAGEMENT
The selection of key indicators for Senior Management (in an SME normally the Board of Directors and the General Manager use the same information, in large companies it is usually different) depends on the factors mentioned in stages I and II. It is usually a balanced mix of physical and monetary indicators, between internal information and context information, between short and medium term information.
For the choice of indicators, different ways of reasoning can be used. In recent years, R. Kaplan and D. Norton's “Balanced Dashboard” has become very popular, but it is not the only package.
In the company in the example, at least, these indicators should exist:
R. Kaplan and D. Norton's web site is Balanced Scorecard Collaborative (www.bscol.com)
STAGE IV. OBJECTIVES, GOALS, INDICATORS AND RESPONSIBLE BY LEVEL.
| INDICATOR LISTS
(“Database of Balanced Scorecard Measures” from Metrus Group) |
Once the indicators are defined at the top of the company, it is necessary to do a very important task (usually neglected): the vertical chain of indicators, according to the processes and organization. More than one conflict has its origin in not having clarified how each person should contribute to the achievement of the company's results.
In the example taken, a table like the one attached could be made, where some indicators are indicated for the Commercial Manager.
| AREA | RESPONSABLE | OBJECTIVE | INDICATOR | GOAL |
| COMMERCIAL | AB | Good position in the market. | · Sales by line and customer.
· Market share. · News from the competition, customers and macro environment |
> 50% |
| Customer satisfaction | Complaints received. | |||
| Improve profitability | · Price evolution.
Marginal contribution per line |
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| Incorporate sales of new products | % of sales of new products in total sale. | |||
| ADMINISTRATION AND FINANCE | CD |
STAGE V. VARIABLE REMUNERATION - BUSINESS TRANSFORMATION
In this matter we must consider the existing variable remuneration systems in the company (if the factory workers have an incentive based on labor productivity, we will have to measure that productivity). In turn, it is necessary to take into account special programs that exist to improve the competitiveness of the company (if there is a cost reduction program, we will have to measure costs).
In the example:
The company has the following systems in place:
- Participation in net profits Goalsharing (fulfillment of objectives) Commission on what is sold and received Factory personnel. Multiple cost.
The context is presented with:
- greater concentration of retail trade and competitive pressure that forces prices to fall. recession and lower sales in units. delay in collections.
The company is making an effort to improve its competitiveness
Consequently, it will be necessary to incorporate (as a minimum) the following indicators in the Commercial Manager's list:
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