Previously, we discussed how building a dashboard for your business is like operating a vehicle. So how do you build a better dashboard for your business? It boils down to looking at the areas within your business that can be measured and, as a result of proper measurement, managed more effectively. Measurement and Feedback systems are the tools for the 21^st century entrepreneur. These tools build your company’s customized dashboard. Businesses are typically organized into four to six performance areas, which include:

•  Finance: All activities relating to the financial aspects of the business including accounts receivable, accounts payable, payroll, reporting, etc.
• Operations: All activities relating to the development, production and delivery of a product or service including manufacturing processes, inventory management, quality control, order processing, service delivery, shipping and receiving, etc. 
• Customers: All activities relating to the acquisition and retention of customers including marketing, sales, customer service, etc. 
• People: All activities relating to hiring, training, managing, growing and developing people.

Once you identify your business’s performance areas, you then establish critical success factors (CSF) related to each area. This is the foundation of your feedback system. CSFs are specific goals that are designed to overcome weaknesses, exploit opportunities and/or stimulate performance in a given area. The goals are strategic in nature and fit within your company’s broader vision, mission and core values.

After you have pinpointed performance areas and developed goals (critical success factors) for these areas, then it’s time to develop a way to measure how well your team is doing in each area. Your measurement tool is called a Key Performance Indicator (KPI). KPIs measure outcomes and often are expressed in ratios or indexes made up from multiple activity measures. KPIs provide feedback to the team and managers about how they are performing in reference to the CSFs established in their given performance area. In essence, your team will have a way to look at their own personal business dashboard. They can “add more fuel” if they see that they are lagging in an area. Or, they might see how they can make an adjustment that affects the whole process and improves overall productivity.

You’ve heard the line, “Build it and they will come,” right? Well, this is ultimately true about your business dashboard. You have a winning formula when you build a dashboard that your employees can understand how it hits your bottom line as well as their bottom line. A business dashboard will make it easy for them to see how their efforts affect the company’s performance. Once your team knows what the company’s overall goals are, they can then be told what is expected of them and what part they play in realizing those goals. By implementing a performance accounting system, you can abide by the adage, “What is inspected is respected.” You will find that goals come to life when there is a measurement system in place. Ultimately, people perform best when the “rules of play” are explicit, and the scoring method is clear.

Your business dashboard allows you to effectively manage your company’s performance and to share this performance with your employees so that your goals become their goals. Building a better dashboard is key to increased profitability and a smooth running operation.