In the fast-paced world of business, having a clear and concise understanding of your company’s performance is paramount. Dashboards are powerful tools that provide real-time insights, enabling informed decision-making. However, the success conditions of a dashboards approach depends on several key conditions that must be met.
Understanding Dashboards
Before delving into the conditions of success, let’s first establish what dashboards are. Dashboards are visual representations of data that allow users to monitor various metrics and KPIs in one central location. They provide a quick overview of a company’s performance, making it easier for decision-makers to grasp complex information.
Importance of Dashboards
Dashboards are not just fancy displays of data; they are invaluable assets to any organization. They help in improving operational efficiency, identifying trends, and fostering data-driven decision-making.
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The 7 Conditions of Success
The list of success conditions for a dashboard approach seems long, but the first two are fundamental. They are the appropriation by the leaders of this tool and the relevance of the indicators that are part of the dashboards.
Appropriation by the leaders
Dashboards only gain their legitimacy from being used as a top priority by the leaders in their way of managing the company. These tools should be at the core of management processes, supporting team animation, whether it’s the executive committee (general management dashboard) or other teams (service dashboards). They should, therefore, encourage action when needed or contribute to the “return on management,” allowing leaders not to spend time on what is not worthwhile.
The worst thing that can happen to an organization is to ask management controllers to develop dashboards that they then offer in the corridors: “Who wants my dashboards?.” This type of situation that we have dramatized by exaggerating it a bit is, however, not unknown. It corresponds to organizations in which leaders do not show their involvement due to a lack of sufficient management culture. It is illusory to think that in such a case, managers will be interested in tools for which their leaders have shown no interest.
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Ideally, the leader requests to be given the daily dashboard as soon as possible (sales from the previous day, orders received, the percentage of those not delivered, with the reasons).
Following which, he calls or even personally visits each responsible person to ask them to explain the reasons for a performance failure. Needless to say that in such a case, the management controllers will not need to ask the responsible persons to use such documents because they will ensure that they receive it as soon as possible to be able to answer the leader’s questions!
The ideal is also that the general management dashboard is used as a support to animate the executive committee meeting. Such a practice will naturally tend to trickle down to lower levels of the hierarchy.
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The relevance of indicators
The relevance of indicators is the second most important success condition. We have devoted a methodological section to it above.
However, even if the search and detection of relevant indicators is fundamental, it is better to start using indicators whose relevance is not entirely certain but that allow the initiation of a process where dashboards become a management and team animation tool, even if the quality of these indicators is improved later.
No dashboard is “set in stone,” and it is entirely acceptable to leave room for evolution and improvement in these tools over time. In the hierarchy of success conditions, being at the heart of management processes is clearly the most important!
Providing essential information
This condition complements the previous one. Some indicators are only important at a given time and lose importance over time. They will be removed from the dashboards, which should seek a “return on management… In many cases, essential information can only be perceived through forecasts concerning the near future, with a focus on prioritizing the final situation (end of the year, end of the project), even if it can only be obtained through “back-of-the-envelope” calculations… In such cases, care should be taken not to reproach the forecasters afterward for being wrong.
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It is generally advisable to accompany every dashboard with comments. They are, in principle, the responsibility of the operational staff. If management controllers write them because they are best placed to consolidate them, everything must be done to maintain the operational staff’s responsibility for evaluating the situation.
Anything that diminishes the delegation of responsibilities to the operational staff contributes to reducing the quality of management control.
Maintaining consistency with the organizational chart
Consistency in the organizational chart can be preserved by facilitating horizontal and vertical consolidations. If there are several regional units of the same type, they must have the same definitions of indicators, validated centrally, to enable consolidation. This is also true for process dashboards.
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The frequency of dashboards
Not all dashboards necessarily need to be monthly, like budgetary control. We have already mentioned the example of a daily dashboard to track sales and deliveries in a distribution company. Even more frequent dashboards can be imagined, such as in a factory where the hourly production rates of machines are monitored or in a large store where you want to know the number of cash registers to be open by hourly segment. Conversely, some strategic indicators, such as market share trends or the evaluation of service characteristics, will follow the frequency of studies conducted for this purpose (quarterly, six, nine, or eighteen months).
The urgency of information
The urgency of information provided by indicators is often said to need to be consistent with the need for a rapid response. This is an opportunity to say that management control does not have the same concerns as accounting and that “back-of-the-envelope” information that allows a timely response is more useful than very precise information that arrives too late.
Formatting
The formatting of dashboards, especially if it becomes an essential support for management animation, should aim for a certain homogeneity, a problem that can arise when documents from various sources need to be compiled into a single booklet. It most often reflects the preferences of the leaders, with some preferring graphs, others raw numbers, and still others smileys or traffic lights. It is not uncommon for a change of management team to result in a change in presentation styles, without the underlying numbers having changed. The quality of the presentation should contribute to the idea of making people want to use this tool. However, the pursuit of aesthetics should not consume too many resources, in terms of working time or printing quality.
Who Should Create Dashboards?
The responsibility for creating dashboards should ideally rest with the operational staff. However, when technical expertise is needed, management controllers can play a role in ensuring accurate data consolidation.
Key Benefits of Effective Dashboards
Effective dashboards lead to improved decision-making, better data management, and streamlined operations. They enable organizations to stay agile and responsive in today’s competitive landscape.
Conclusion
In conclusion, the success of a dashboards approach depends on several critical conditions, including leadership involvement, indicator relevance, and providing essential information. By adhering to these conditions, organizations can leverage dashboards as powerful tools to drive success.
Frequently Asked Questions (FAQs)
- What are dashboards in business?
- Dashboards are visual representations of data that provide an overview of a company’s performance and help in data-driven decision-making.
- Why is leadership involvement crucial for successful dashboards?
- Leadership involvement ensures that dashboards are integrated into management processes and prioritized for decision-making.
- How frequently should dashboards be updated?
- The frequency of dashboards should align with the events or processes they monitor. Daily, monthly, and quarterly updates are common.
- What role does indicator relevance play in dashboards’ success?
- Indicators must align with the organization’s goals and objectives, ensuring that the data displayed is meaningful.
- What benefits do effective dashboards offer to businesses?
- Effective dashboards lead to improved operational efficiency, better decision-making, and data-driven insights that help companies succeed.
