Chapter 6 - Performance reports for management Flashcards
When designing a good performance report there are four key considerations:
1 What is the purpose of the report?
2 Who is the audience for which the report is being produced?
3 What information is needed (as a result of points 1 and 2 above)?
4 What layout is suitable?
What should the purpose of a performance report be aligned to?
The overall mission of the organisation
What should we consider in the report regarding the Audience?
Ensure the report contains ‘good’ information i.e relevant to the needs of the user.
What are five things that information in a performance report must be?
- Matching the purpose of the report
- Aiding comparision i.e with a good benchmark
- Have internal and external info
- Focus where we are performing both good and bad
- Provide balanced view of financial and non-financial performance
What should the layout of a performance report aim to do?
Help the user quickly understand the important information presented.
What can a poor layout with information overload lead to?
- Detracting from usefulness of the report
- Hides facts
What are three ways of helping avoid information overload?
- Present graphs or charts
- Narrative explanation drawing attention to important matters
- Option to drill down to greater level of detail
What does Data visualisation do? (3 things)
- Allows large volumes of complex data to be displayed
- In a visually appealing and accessible way
- That helps understanding and use of the data.
What is the most common use of data visualisation?
Dashboards to display KPI’s
What are four key benefits of data visualisation?
- Accessible
- Real time
- Performance optimisation
- Insight and understanding
What do we mean by the key benefit of data visualisation below?
Accessible
More user friendly - dont need to be excel or IT expert to use or understand
What do we mean by the key benefit of data visualisation below?
Real time
- Synchronised with real time data visualisation tools give live updates
- Allows quicker business reponses
What do we mean by the key benefit of data visualisation below?
Performance optimisation
Quick and clear information being displayed allows for better decision making
What do we mean by the key benefit of data visualisation below?
Insight and understanding
Big data can be used to provide better insight and understanding
Why is quantitative data often the most reliable?
- Internally generated
- Easily quantified
- Additionally monitored i.e by audit
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Collection of data and failure to understand the underlying samples (2)
- Hard to sample a whole population
- Samples may be manipulated i.e paid reviews on websites
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Failing to look for underlying causes
For example, an internet retailer may report that the number of hits to their website has increased by 50% over the last two weeks.
This does not seem as impressive if it turns out that the manager has advertised some heavily discounted products.
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Looking at figures in isolation
Example: Look at sales and gross profit - Sales may increase because a Black Friday deal but this could result in less profit.
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Data processing
Example: Data can be skewed by extreme values (mean)
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Presentation of data
Graphs may indicate significant changes but only because of scale (i.e pound at Brexit)
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Failing to evaluate using a suitable benchmark
May report a 20% growth in sales which seems good until you compare to the market which is 30%
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Failing to understand percentages
Suppose quality control reject rates increase from 5% to 6% of total items made. This should be reported as a 20% increase but some managers may state that rejects have only increased by 1%.
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Selective use of figures
Some managers may select only the positive indicators.
Explain the common mistakes and misconceptions that people make when using numerical data for performance measurement below.
Confusing correlation and causality
Suppose a new manager has invested heavily in their division and, at the same time, revenues have increased. It is very easy to assume that the increase in revenue was caused by the investment, whereas it may be due to a different cause altogether, such as an up run in the economy.
What is qualitative information?
Information that cannot normally be expressed in numerical terms
What are the three problems with qualitative information?
1 - Qualitative information is often subjective in nature
2 - Qualitative information may be incomplete
3 - Lack of management familiarity and/or inadequate information systems
What are two potential solutions to the first problem of qualitative data?
- Look at trends in performance since the biases will be present in each individual time-period but the trend will show relative changes in quality.
- Turn the information into qualitative info (Scale 1-5)
What is a potential solution to the second problem of qualitative data?
The organisation could encourage more people to provide feedback by offering a prize draw
What is a potential solution to the third problem of qualitative data?
- Employee training
- Systems upgrades or
- Additional checks and controls of the qualitative data (but this will be at a cost).
