Leading Indicators: The Sophisticated CFO’s Guide to Choosing Key Performance Indicators That Matter & Dashboarding
A critical component of nonprofit effectiveness is the organization’s ability to identify and track meaningful “leading indicators” that serve as mile markers to tell you if you are headed in the right direction—a course charted by your strategic plan. Carla McCall, Co-Managing Partner, and Robin Leet, Business and IT Advisory Manager, from AAFCPAs provided guidance for nonprofits on the leading, predictive metrics that may have a significant impact on an organization’s operational and financial results.
We went beyond the classic financial KPIs, providing guidance on making correlations between non-financial and financial metrics. AAFCPAs also provided insights to bring clarity to your data, and tools to make more meaning out of the information in our systems through dashboarding.
Summary of Presentation:
Leading Indicators: Choosing Key Performance Indicators That Matter & Dashboarding
Carla McCall, Co-Managing Partner, AAFCPAs
Robyn Leet, Business & IT Advisory Manager, AAFCPAs
Summary
A critical component of nonprofit effectiveness is the organization’s ability to identify and track meaningful “leading indicators” that serve as mile markers to tell if your organization is headed in the right direction—a course charted by your strategic plan. The presenters provided guidance on the leading, predictive metrics that can have a significant impact on an organization’s operational and financial results.
Key Performance Indicators
The presenters differentiated leading indicators from lagging indicators. Lagging indicators are output-oriented. They are easier to measure, but harder to improve and influence, since they measure past performance. Leading indicators are input-oriented. They are harder to measure, but easier to influence.
Leading indicators tend to relate to activities undertaken by employees. The idea is to break down activity into measurable inputs. For the indicators to have the greatest impact, the whole team needs to be involved in the process of identifying inputs and measuring outcomes. We want indicators that tell us:
- How the team performs as a whole
- How special sub-teams perform
- How each individual on the team performs
They offered suggestions for choosing and implementing KPIs:
- Choose indicators that go beyond financial measurements
- Don’t track too much at once; limit it to the most important indicators
- As a motivational strategy, it can be helpful to gain “early yardage” by doing an activity that will get results quickly. Hit the biggest impact items first.
- Lay out KPIs in a visually clear format, not just an array of figures
- If it doesn’t work, try something else
- Celebrate the team’s successes
Dashboarding
A dashboard displays information from databases, and graphically represents KPIs in real time for management. A dashboard is customized to your organization’s operations and outcomes, and serves to focus attention on the activities and decisions that matter most.
The presenters described the key functions of a dashboard:
- Analytics: KPI metrics, to enable analysis of trends
- Information: reports on key activities
- Operations: To keep the organizations moving with workflow queues, quicklinks, and tasks–to enable performance of responsibilities more timely and effectively
The audience and presenters discussed the relative advantages of various platforms that enable dashboarding:
- Netsuite (discount for nonprofits available through Techsoup)
- Adaptive
- Intacct
- Tableau (also available through Techsoup)
- MS Power BI
Keys to a successful dashboard:
- Limit the number of items. Keep it focused.
- Present high-level information. If detail is really needed, the user can always drill down.
- Mix graphical with statistical representation
Meeting Presentation: KPI Dashboardinag – AAFCPAs