Performance Dashboards: What to Measure

Dashboards can have many different uses.  The specific departments or users of the data will determine what is included on the dashboard.  For example, a corporate accounting department would have a vastly different dashboard than a manufacturing unit.  While the accounting department would measure things like length of monthly closing, the accounts payable cycle or days sales outstanding, the manufacturing unit might measure operating efficiency, labor hours per pound of production and lost time to injuries.

In the same way that different groups within a large corporate setting will have vastly different dashboards, a small business will likely have a much different dashboard than a large public corporation.  And in fact, the dashboard of one small business will be different than the dashboard of another.

A dashboard is nothing more than a tool for improving performance.  As such, it must be created to monitor the most important measures of your individual company performance.  It is also important to remember that a business owner can only keep his or her eyes on a limited number of measures.  Careful deliberation on the keys to success of your business should be the items that populate your dashboard.

Another important consideration is the use of comparative analysis to artificial measures like budgets and quotas.  While a department or even an individual dashboard might contain comparative measures to quotas or budgets, a company-wide comparison to an artificial yardstick is usually not advisable.  Remember, a corporate performance dashboard should identify and measure the keys to business success.  Is comparison to a budget or quota really a key to your business success?  If the yardstick has been put in place by your primary lender and is a determining factor in the renewal of your credit line, then maybe it is.  If it’s a self-imposed yardstick, you should be careful of using valuable real estate on your dashboard with such a measure.

Copying the dashboard of another company will be no more effective at managing your business than using their financial statements to run your company.  Having said that, there are general categories that all small business owners should consider when compiling a dashboard; cash flow and profitability, operational efficiency, and sales and customer satisfaction. We’ll talk about each of these categories individually over the next several posts.


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