Digital Dashboard Spreadsheets for Management Reporting

Digital Dashboards & Management Reporting: Design Principles

Learn how the effective visual display of financial information on well-designed digital dashboards can enhance the management reporting process

Preparing Management Reports

Good management reporting is all about getting the right information to the right people in right quantity at the right time, and to do it at a minimum costs.

To achieve this, it is important to take the following points into consideration when preparing management reports or when designing digital dashboards:

1) Brevity

Too much information can cause information overload. Management reports and digital dashboards should only contain the key performance indicators relevant to your business. Providing managers with reams of information risks the vital facts being overlooked. Managers are busy people and should only be provided with the information they need.

2) Clarity

Management reports and digital dashboards should be designed in such a way as to communicate complex data to a manager quickly and clearly, using the least number of statistics in the shortest possible reports.

Plotting data on well-designed graphs and the use of other data graphics, such as data maps, pie charts and traffic light trend flags, are all excellent ways to efficiently communicate complex quantitative ideas to a viewer. However, the graphical design of digital dashboards and management reports should be clean, understated and simple, so as not to detract from the message.

As Edward Tufte puts it in his book, the Visual Display of Quantitative Information, "What is to be sought in designs for the display of information is the clear portrayal of complexity... that is, the revelation of the complex."

3) Accuracy

Of course, management reports or digital dashboards are only as good as the accuracy of the information that goes into them; as the old saying goes, rubbish in, rubbish out. However, the degree of accuracy relates to its usage. An official tax return will have to be accurate to within a few cents or pence. Management reports and digital dashboard can often be rounded to the nearest hundred or thousand currency units.

4) Timeliness

In today's volatile and fast moving world, it's more important than ever that the information contained in digital dashboards and management reports is up-to-date.
Nevertheless, producing accurate information quickly does have its cost. Information technology is now capable of producing real-time or near real-time reporting and even though prices are dropping all the time, buying, installing and maintaining sophisticated management information systems still requires a major investment.

It is, therefore, important to weigh the costs of producing the information against its value. Bear in mind there are many more affordable, but powerful tools like Microsoft Excel and our own digital dashboard, Control Panel, that are quite sufficient for many companies.

5) Action

Make sure management reports and digital dashboards are directed to mangers that can take appropriated action to correct problems revealed in the reports. Likewise ensure the reports have the salient facts and figures to enable a manager to take the appropriate action to resolve the problem.

6) Rarity

Unusual patterns in the data contained in the management reports and digital dashboard needs explaining. Management by exception is an effective way to spot problems. By simply comparing current values with previous periods, managers can focus their attention on exceptional items, which fall outside acceptable tolerances.

Variance analysis uses a similar principle. By comparing actual performance with budgets, and predetermined standard costs, the difference between them can be analysed and explained. Traditional budgeting and standard costing is time consuming and has its critics, but if done correctly, it is still a useful procedure in the management control process (click here for more about effective budgeting).

7) Volatility

The volatility of the information will determine how often management reports and digital dashboards need to be updated. Static events don't need reporting as often as dynamic events. Volatile or stochastic information in reports should be highlighted and annotated, explaining the event's impact and current relevance to the company's performance.

Using Management Reports

Amongst other things, good management requires effective control. Management reports and digital dashboards are used as part of this management control process.

Although management reports and digital dashboards are no substitute for a crystal ball, at the very least they help mangers ask the right questions and alert them to potential problems.

To control effectively, managers must assure that the actions they take are in line with the desired results. To achieve this, the four fundamental elements involved in the control process should be followed:

1) Define a predetermined plan or goal

Companies use business plans, budgets and forecasts to set goals for their organisations (see our product Budget Controller for more information on simple and effective budgeting).

2) Measure the actual performance

It is the job of accountants and financial controllers to measure the actual performance and prepare management reports or digital dashboards for management to analyse and act upon.

3) Compare Performance with Goals

Management reports and digital dashboards provide the feedback managers need about the state of the current situation. It provides them with the information they need for effective decision-making and forms the basis for any corrective action that might need to be taken.
The power of information is well documented; it is without doubt, an important aspect of effective management.

4) Corrective Action

Management reports and digital dashboards should reveal what corrective action, if any, needs to be taken. Equally they might reveal that the original business plan or budget was unrealistic and needs updating.

The whole process is dynamic and iterative. Goals need adjusting to the changing realities of an increasingly volatile world, just as continuous action is needed to keep the company heading in the right direction.

The laws of physics state that its the natural tendency of things to approach a chaotic state because of something called entropy, and by simply applying negative entropy we can avoid this unfortunate state of affairs.

Put into a managerial context, negative entropy means that hard work, good planning, excellent execution, continuous review and self-assessment are all needed to keep an organisation organised.