How to use dashboards to boost performance
“What’s measured, improves.” Management guru Peter Drucker’s famous saying has inspired many entrepreneurs to measure their business performance.
But a lot of companies miss a key part of the equation. Measuring isn’t enough. Two other steps are necessary to translate data into improvement.
First, your team has to see the data. And second, they have to talk about it and act on it. Dashboards are the key tools to transform your data into meaningful action that will boost your performance. They show key performance indicators to employees who can then discuss the company’s progress.
What are the benefits of dashboards?
“Dashboards are a critical element for a culture of continual improvement in any business,” says Anish Ambujakshan, a Business Advisor with BDC Advisory Services who coaches entrepreneurs on operational efficiency.
“A lot of companies realize the importance of measuring performance. But many don’t leverage their metrics for communication or problem-solving. Dashboards help you effectively do that.”
A well-designed dashboard not only enables performance monitoring, but also engages and motivates your team.
What is the purpose of a dashboard?
Dashboards allow you to:
- benchmark, monitor and improve performance
- set targets
- ensure systems, processes and teams are operating at a stable rate, without abnormal fluctuation
- incentivize your team
Example of a dashboardEnlarge the image
How do you create and use a dashboard?
1) Create KPIs
KPIs are the building block of a dashboard. The key is to figure out the right ones for your business.
“One of the most commonly asked questions when I speak with business owners is, ‘What is the right KPI for my business?’” Ambujakshan says. “Well, it depends. It depends on the direction and priorities of the company. All KPIs must support the company’s strategic and operational direction.”
The decision starts with your strategic objectives or your company’s operational pain points. You can use lean principles to identify the most important challenges you face. Your goal may be to improve on-time job completion, acquire 20% more clients or capture 10% more market share.
Next, develop a small number of relevant KPIs to measure progress toward the goal. You should set different KPIs for each team at various levels of the business, from management to operations.
What are operational metrics?
Operational metrics are KPIs measured at the operational level that often give you real-time information about your progress toward a larger strategic goal.
Let’s say your challenge is improving customer satisfaction. One KPI could be based on regular surveys of client feedback. This is known as a strategic KPI, because it directly measures progress toward the strategic goal.
Suppose that you determine that slow service is behind the poor customer satisfaction. A second KPI could be your on-time completion rate. This is an example of an operational indicator—one directly related to operations.
“Always reflect on how your company’s strategy can be fulfilled by your operations,” Ambujakshan says. “Then introduce operational KPIs to help you meet your strategic goals. KPIs must cascade from strategy to operations.”
Strategic vs. operational metricsEnlarge the image
2) Select the right dashboard for your needs
A business dashboard is like a car dash—a collection of indicators showing the most important information you need to get to your destination.
Performance dashboards come in numerous forms. It could be as simple as a big physical board put up on a wall on your shop floor and updated by hand. It could be an electronic screen mounted in a prominent place in the business. Dashboards can also be shared with employees in the field via a computer app.
Electronic dashboards with diverse features are available from a variety of vendors at reasonable prices. Many offer customized user interfaces, track downtime and other inefficiencies, and offer alerts, notifications and even intelligence reports. On-premise and cloud versions are also available.
With Industry 4.0 or smart manufacturing technology, you can automate data collection, analysis and display directly from equipment and machines in real-time.
Example of a service industry dashboardEnlarge the image
What makes a good dashboard?
Dashboards should be:
- Updated often—e.g. daily, weekly or monthly, depending on the business.
- Clear and simple—so your team can quickly see the KPIs and easily understand them. “For example, at a call centre, customer satisfaction is strongly correlated with resolving issues on the first call,” Ambujakshan says. “The first call resolution rate is a simple and relevant KPI that can be understood by all agents.”
- Manageable—you can start with a couple of KPIs, then later see if it may be useful to add one or two more.
- Reviewed regularly—to ensure they encourage behaviour that moves the company to its goals.
How do you create a strategic dashboard?
A strategic dashboard is meant for owners and management. It contains strategic KPIs and possibly sensitive information not relevant to all employees. Examples may be financial KPIs such as revenue or profit growth.
How do you create an operational dashboard?
Operational dashboards contain KPIs relevant to a specific department. Each team should have its own operational dashboard with unique KPIs.
Never stop monitoring. Remember, facilitating ongoing discussions using dashboards is a great way to reinforce a continuous improvement culture.
3) Continue monitoring your dashboard
Supervisors and employees should meet regularly to talk about the dashboard relevant to their team. Discuss what’s going well, what’s going less well and opportunities for continual improvement.
“Never stop monitoring,” Ambujakshan says. “Remember, facilitating ongoing discussions using dashboards is a great way to reinforce a continuous improvement culture.”
- Employee input is invaluable to ensure the right KPIs and dashboards are chosen. This input also helps ensure your team’s buy-in for using the dashboard.
- Targets should be achievable and realistic. Challenging your team is useful, but it’s discouraging to set targets that employees struggle to reach.
- KPI data should be easy to obtain. Also dedicate someone to be responsible for collecting and reporting metrics.
- Train employees on tracking KPIs and using the dashboard.
- Use dashboards alongside other management tools, such as employee performance reviews and incentives.
Dashboard example for a refurbished motor business
A business refurbishes and sells diesel engines. Its key differentiator is an extensive warranty program.
A lot of engines are coming back with warranty issues requiring extensive rework.
The company develops three KPIs on a monthly basis:
- number of warranty issues
- percentage of warranty issues that could have been avoided (e.g. because work was done wrong or the wrong part was used)
- estimated cost of rework
The company creates an operational dashboard showing the first two KPIs. This is displayed to all employees—either on a physical board or on an electronic display. A second management dashboard is created for management that includes all three metrics.
Tracking the warranty issues, causes and costs focuses the company’s attention on fixing the problem. Warranty issues decline, and less time is needed for rework. This frees up production capacity for regular work.
“A well-designed dashboard not only enables performance monitoring, but also motivates your team when you see positive results,” Ambujakshan says. “It improves performance and engages the team better.”