Whether you’re formally in FP&A or in a business intelligence or analytics group, reporting is the most basic function of a business support organization. Fundamentally, what are the results of the activities of the organization and how do we present them in a way that is convenient, informative, and actionable? Reporting itself is a reflection of the values of a company, intentionally or not. How a company measures success drives behavioral incentives throughout the organization. It says, “This is what is important to us.”
In short, what is measured is managed.
What data is presented and how it is shown aides in creating the framework with which we and management think about the business. This framework becomes the context through which decisions are made.
The question for reporting then, from the analyst pushing the report to the CFO, is does the suite of reports going out daily/weekly/monthly/quarterly/annually to all levels accurately reflect and advance that framework? If not, how can we change reporting to more effectively empower our organizations to make better decisions?
Imagine for a moment that you’ve been given a blank slate to rebuild the entire reporting suite for your company from scratch. Before your mind starts running with a mix of dread and hope and all of the messiness of what this entails, take a step back.
First, what are the key factors to consider in any individual report design? In my view, most considerations for reporting can be drawn back to two basic ideas:
- Hierarchy – Or, who is accountable to who and how? What is the functional structure of the organization and where can action realistically be taken to change results? This can differ from the formal hierarchy, you as the analyst are in the best position to make these judgment calls. Actions available are generally people (hire/fire/compensation), product (the offering itself, marketing, fulfillment, support and aspects related to customer experience) and pricing related outside of the executive suite where there could be strategic considerations as well.
- Goals – Or, why are you even tracking this stuff? What’s the point? How has your organization defined success and what does that say about how each of the functional groups in your organization should score themselves against that success? What metrics can provide additional context to those scores?
An example is probably helpful here.
You are the analyst for an online clothing retailer assigned to create new reporting for the marketing / advertising department. Okay, that’s a little broad, let’s ask a couple questions to get more precise that follow the two ideas above.
Who is the new reporting for? Who is the audience?
A marketing report going to the CEO vs CMO vs Digital Marketing Manager would all be significantly different. Content, detail and intention are all different for those levels.
What will it be used for? Why do it?
Are you evaluating vendor performance or employees? Marketing ROI’s, campaign tracking, expense management initiatives?
How do you measure success? What metrics are relevant?
How have you defined success? A target conversion number, cost to acquire, ROI, mailing list size? What is good or bad? What contextual metrics are necessary to properly understand and explain those results? What does the audience need to be informed and make a decision?
Admittedly, these are simple questions and we oversimplify further by discussing these concepts in our pretend vacuum. But, the concept is a useful foundation for considering the reporting alignment of an entire organization and a useful shorthand for day to day report development.
In the next post we’ll take a look at how reporting alignment is a powerful proxy for an organization’s alignment of incentives, what it looks like and the implications of misalignment and potential solutions.