<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=349935452247528&amp;ev=PageView&amp;noscript=1">
Find out where you can get a Taste of TAB... our global events blast is on!
Search
word-map-thumb

The Alternative Board Blog

KPIs: What Makes a Good Executive Dashboard?

Oct. 1, 2013 | Posted by The Alternative Board
closeup of a young man in suit driving a car with manual transmi

An executive dashboard is a tool that gives an easy-to-absorb indicator of the important business metrics - also known as Key Performance Indicators (KPI) - for your business. A good dashboard should convey important information at a glance.

The business term derives from automobiles. You can tell from your car dashboard if you are running low on gas, running above the speed limit or if one of the sensors has detected a problem. You can glean this information from your car while driving. At a minimum, a good dashboard needs to meet the KISS Principal. When designing a dashboard, less is more.

Clearly, any business dashboard should meet this minimum criteria. But, what makes a really good dashboard? My experience is that 4 additional criteria are important.

Is it Visible - to the Right People?

Why do you think call centers keep real-time stats on scoreboards? So the reps can see how they are doing as a team and can compare their own performance against the other reps. For dashboards, the right people need to get the dashboards.

In Tom Davenport's HBR Blog "Data is Worthless if it is Not Communicated", he advises "never assume that the data will speak for itself". We've all seen the analyst that puts together fabulous data, emails it out to the management team and assumes his job is done. When the management team confronts the analyst months later about poor performance with a KPI, when it's too late to affect, the analyst responds with "didn't you read my email?"

That's not good enough. If the data is worth producing, it's worth the management team reviewing as a team and discussing what to do about the results. If the managers won't organize this themselves, it's a great leadership opportunity for the analyst.

Want additional insight? Download Setting KPIs for Business Success now to learn more

DOWNLOAD
Can We Tell if We're Winning?

In "The 4 Disciplines of Execution", McChesney explains that a good business scorecard must be able to tell if the individual...and for a dashboard, the business... is winning. He advises that in 5 seconds, you should be able to tell if you're winning or losing. The same goes for the dashboard. Just like an automobile dashboard, a good business dashboard informs the reviewer of whether the business is winning or losing on their KPIs. This is why Green, Yellow & Red indicators are so important on dashboards.

A Good Dashboard Must be Designed

When I was getting my Land Rover (LR3) repaired, the mechanic was reflecting on how much better the LR3 & LR4 are from the older Discovery models. He quipped that on the older models, the dashboards were "lit up with red and green like a Christmas tree". Older Land Rover models were a Frankenstein of components from multiple manufacturers.

This is a good lesson for dashboard developers. If the dashboard is thrown together based on what data is currently available, it's probably not going to be very useful. Instead, it should be designed - just like a website - based on what KPIs the business needs. Once the dashboard is designed, figuring out where to get the data becomes clear.

The other thing to keep in mind is that Land Rover Discovery I & II models now find it difficult to get replacement parts. Business dashboard designers need to also consider how difficult it is to assemble the dashboard. If it's labor intensive and generating it requires analytical gymnastics from the analysts, it's going to be difficult to grow with the business.

Start with the end in mind and design a dashboard which can be easily derived from readily available data sources.

Answer the "So What" Question

The final consideration when designing a dashboard is whether each of the KPIs included is important enough to answer the "So What?" test. If a KPI is red, what will the managers do about it? If the "So What" test cannot be answered, then either the KPI is not important to include or there is another metric that will be a better indicator of that business area. Every KPI on the dashboard should be important enough where action will be taken if the indicator is red.

What's your best example of both a good and bad executive dashboard?

For more information on business leadership topics like succession planning, strategic planning, communication, and sales/growth, check out TAB's PULSE Survey on Business Leadership. This survey polled small business owners on hot-button topics related to leadership and ownership.

Read our 19 Reasons You Need a Business Owner Advisory Board

DOWNLOAD

Written by The Alternative Board

Related posts

The Most Common Ethics Mistakes Made by Business Leaders
Mar. 20, 2024 | Posted by Lee Polevoi
Most business leaders regard themselves as ethical individuals, particularly when it comes to running a business that values integrity above all else. At the same time, even the most conscientious...
How to Build an Ethical Workplace Culture
Mar. 6, 2024 | Posted by Lee Polevoi
Most of us understand what it means to act in an ethical manner. CEOs and business owners frequently advocate a set of ethics by which to run their organizations, helping the workforce maintain a...
Unlearning Conformity: How to Overhaul Old Business Paradigms
Feb. 14, 2024 | Posted by The Alternative Board
Industry is evolving at a record pace, particularly in the post-pandemic era. While COVID lockdowns and shutdowns temporarily changed the way businesses operated and employees engaged, today’s...
Ay Yi Yi: The Fascinating World of AI
Jul. 12, 2023 | Posted by The Alternative Board
Artificial intelligence. What once felt wildly futuristic has suddenly become mainstream and is growing more ubiquitous by the minute. You are likely already interacting with AI, even if you are not...
3 Surprising Trends That Will Change the Way You Run Your Business
Feb. 9, 2023 | Posted by The Alternative Board
There has been a lot of talk lately about Artificial Intelligence and how it is poised to change how nearly every business owner runs and grows their company. And it’s already happening. The recent...
Ways to Handle Supply Chain Shortages
May. 17, 2022 | Posted by The Alternative Board TAB
You don’t need a crystal ball to see that supply chain disruptions are likely to continue for some time to come. As we are all becoming painfully aware, supply chain disruption “is a major factor ...
How to Achieve Business Success by Knowing Your Strengths and Weaknesses
May. 10, 2022 | Posted by Phil Spensieri
Over my years as a business coach, I’ve heard hundreds of stories about how and why my clients got into business. Each story differs, but one thing remains common: every one of them got into business...
Inflation Busters: 15 PAINLESS ways to Reduce Your Business Expenses
May. 5, 2022 | Posted by Joe Zente, TAB Austin
Inflation Busters: 15 PAINLESS ways to Reduce Your Business Expenses April 20th, 2022 “Frugality drives innovation, just like other constraints. One of the only ways to get out of a tight box is to...
Clamoring for Talent: 3 Ways To Improve Employee Retention
Apr. 29, 2022 | Posted by The Alternative Board
It is still a tough labor market out there. The Great Resignation and the dearth of eager job candidates are keeping business owners shorthanded and clamoring for new talent. In many cases, this...
The Importance of a Leadership Development Plan
Mar. 15, 2022 | Posted by Phil Spensieri
As a business owner have you ever given any thought as to who will replace one of your senior staff if they were to resign today? It’s a hard question, and the truth is no one really knows when...