“I have a binder full of metrics that I report every month. If you have that many metrics to look at, how do you know what is important?”
Complaints like this were common at the first DC-area FP&A Symposium, hosted by FPA Experts. The half-day program included three round table discussion related to building an FP&A Capability: People, Process, and Technology. It also included networking sessions during breakfast and lunch. “There is a tremendous need for FP&A professionals to get out of their offices, meet with their peers, and exchange ideas of what is working for them, and where they can use some help,” said the symposium organizer, Ken Fick.
“Old metrics never die, but new ones are born all the time,” said one attendee in the “Process” session. The increase in collected data makes this challenge greater because the potential exists to measure everything, whether important or not. The group offered the following ideas for fixing the system of developing, deploying and reporting on measurements:
- FP&A role is to deliver insight; craft a one-page report that tells the audience what they need based on your review of the underlying metrics. Do not expect the audience to look through pages of metrics to find what is important.
- Know your audience and customize the metrics you show them. Do not waste their time or divert their attention to unnecessary information.
- Create (and enforce) a hierarchy of metrics. Key metrics relate back to the strategy and desired outcome targets. Anything can be measured, but FP&A does not need to report on everything.
- Be able to show how the metrics relate back to business drivers.
- Clean up old metrics to avoid clutter.
- As part of the periodic performance review, ask whether the right information was shared, and look for opportunities to prune in cooperation with your partners.
- If reports are shared electronically, check the log files to see what is used, or not used.
- Stop reporting the metrics that you think are not useful, and see who notices.
- Educate your audience.
- Develop financial literacy training to explain some of the metrics that are relevant to you (or other parts of the organization) and should be important to them.
- Consider anointing a metric “czar” or a working group to focus on alignment. This should be a rotating position and can be a great way to train new people.
- Explain the WIIFM—What’s In It For Me—so they know why this matters.
Why is it so hard to establish good KPIs? It takes time and clarity of thought for leadership to set out their goals and translate them into meaningful operational plans. That is where FP&A comes in, and we need to help our teams ensure alignment.