Dashboard: key indicators for decision making

For the optimal decision-making of any company, it is necessary to resort to a management tool that provides you with help in monitoring the activities of your team and its evolution over time. We are talking about control boards.

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A dashboard is a diagnostic tool that allows for greater knowledge of the situation of a company or area. Through a screen, you can view all the movements of that company. The dashboard allows decisions to be made based on the information acquired at the moment, which is always up-to-date and can be perceived at a glance.

"What is not measured, is not controlled,
and what is not controlled, cannot be improved". (Peter Drucker)

A dashboard is defined by the areas and indicators that summarize the situation of the company. It has the particularity of being a simple and fast tool to access relevant information in an up-to-date manner to have a complete diagnosis of situations by sectors and thus be able to implement immediate preventive or corrective actions.

What is the origin of the dashboard?

The dashboard originates from the lack of a precise methodology to teach senior managers and the team to organize and configure information. Only at the end of the 20th century, the information revolution generated allowed business sciences to have been able to evolve remarkably in data processing.

For this reason, it was necessary to generate management methodologies so that companies, when making decisions, would not be based only on their intuition and knowledge of each employee or on the sole intelligence existing in digital platforms.

The lack of information technology in the 60s and 70s meant that the few that existed were very limited in manipulating managerial information, which made many of these systems very difficult to keep up to date and impractical to manage.

This working method arises from identifying as "key areas" those issues that can be monitored, and whose permanent failure would prevent the continuity and progress of your company or sector within a competitive environment, even when the result of each sector was optimal.

The same tool was initially created to be applied to the company as a whole, with a global vision, but it proved to be also applicable to a sector or function within the company, which was beneficial in the long term.

Importance of a dashboard of indicators to manage the company.

A company as a formal and informal organization is subject to a certain parameterization in many of its values to facilitate the diagnosis of the situation and decision making. Although there are generic indicators for all companies, especially in areas such as financial economics, each company or sector requires definitions according to its own parameters and defines who is going to monitor that information and how.

When we refer to the "key indicators", we are talking about those data, indices, measurements or ratios that generate information on the situation of each key area for the achievement of the strategic objectives of the organization. Starting from being able to define areas and indicators and seeking support in new computer technologies, an effective diagnostic tool can be designed.

In short, the board itself will be made up of the areas and indicators that digitally synthesize, preferably, a complete diagnosis of the situation.

As a starting point, the general indicators related to the organization's macro-processes must be defined and then the more specific indicators, which are the ones that will explain the performance of the general ones. In other words, a control panel of the General Management is not the same as a control panel of the Commercial Management. The General Management needs to visualize the general performance of all the areas, while the Commercial Area only needs to visualize the performance of its own.

In any case, if the General Manager detects a poor performance of the Commercial Area, then he/she will be able to access more specific indicators that explain why sales decreased, for example.

Current technology allows control panels to be configured based on what each management area needs to monitor and put the magnifying glass on the indicators in red to get to the specifics.

Regardless of the company and sector, in all dashboards after defining the key issues and indicators, special attention should be paid to the following elements:

• Report or screen: it shows the key information for the diagnosis, with its format and configuration. The architecture of the report must reflect the need for information and the culture of use of the company and it is recommended that it be standard at different levels of the organization. This is a paradigm of the information revolution that seeks, for example on the web, to systematize and standardize access to information to facilitate and disseminate its use.
• Indicator period: day, month, accumulated for the year, projected at the end of the fiscal period or for the next few months, etc.
• Opening: way in which the information can be opened and classified to access successive levels of disaggregation, in multidivisional tables or matrices by product, geographic sector, analysis dimension, etc.
• Update frequency: time that elapses between the different updates of the data. Example: online, daily, weekly, monthly.
• Reference: base on which you want to calculate the deviations. It can be a standard, history, the previous month, the average of the last twelve months, the initial or revised budget, an objective or a goal (as a more optimistic version of the budget), etc.
• Alarm parameter: levels above or below which the indicator is of concern, for example plus or minus 5% on a reference basis.
• Graphic: graphical representation of reality that shows us the information. For example, cakes, bars, lines, etc.
• Responsible for monitoring: the person who must inform senior managers when there is any undesirable development in the indicator.
• Automatic notifications: they issue the bases to detect problems according to parameters included in the system.

In summary, the dashboard is an essential tool to keep track of the activities of a company's area, through a precise diagnosis of the situation, whose main function is to warn of possible deviations within the flow of information that is issued by means of a screen, and that will also allow contributing, according to the results of this diagnosis, in future decision-making.