Reports don’t solve problems

We need to start with a good plan

Constructing tailor made performance reports is a challenging activity. Finance people dedicate a lot of effort to understand the critical success factors of the business and manage the data in the information system.

If you are a passionate controller, for sure you have experienced the satisfaction coming from the creation of a reporting scheme that clearly demonstrates the evolution of the company’s results! Managers appreciate it, want to obtain improvements and start to take action.

For simple and straightforward topics, like control of general expenses or sales gaps in some geographic areas, a well constructed analytical report combined with the necessary follow up is usually sufficient to focus attention and stimulate action.

More complex issues are another matter. Just think of equipment efficiency or lead time. Here results are a combination of various processes: sales administration, supply chain, engineering, quality, production planning, shop floor management, etc.

I personally felt frustrated when only limited progress was achieved in high impact matters on which I had dedicated a lot of controlling activities. Over time it became clear to me that reports don’t solve problems!

We must see reporting and analysis as a part of a total process defined by the 4 steps of the Deming PDCA cycle:

  • PLAN: Design or revise a process to achieve the desired results
  • DO: Implement the plan and measure its performance
  • CHECK: Analyze the metrics and review the results
  • ADJUST (or ACT): decide what changes are needed to improve the process.

This means that first of all you need a detailed performance plan. Make sure to identify your goals, and set a clear action plan for all the elements that contribute to its success. For example if productivity is conditioned by specific results in logistics, production engineering, maintenance and shop floor management, you need a plan for each one of these critical success factors.

If the first step has been done with great care and consensus of all people involved, the DO phase will be easier. People know what is expected from them and what needs to measured. Daily problems can be solved quickly.

Also the CHECK and ADJUST phase are troublesome in case a detailed performance plan is missing. People initiate activities of firefighting instead of defining real solutions to the problems. Counterproductive conflicts arise between the different functions involved. In order to avoid this, it is essential to check deeply the data with the team. Without blaming people we can find out where and why we see a lower than expected result. By doing so the adjust phase will always provide an opportunity to correct a problem and we continue the PDCA cycle in a harmonious way.

Controllers should integrate their reporting and analysis into the PDCA cycle. I recommend to critically review the performance data that your company produces. Does it compare actual and planned results? Is the plan defined in a concrete way and shared with the team? Are the data understandable and relevant for all involved people? Do you personally support the check and adjustment activities?

Procede with a proactive mindset. Remember that if you are not part of the solution, you must be part of the problem.