Of course, improving decision-making is the raison d’etre of management reporting. And as a core competence of the finance division, it’s up there with matching costs against revenue and ensuring that taxes are paid.
But it’s surprising how often the process goes awry. Once companies have gone though improvements such as standardizing data, for example, by agreeing simple definitions of operating profit throughout the group, many stop there and end up producing monthly reports that are mere “memorandums of data,” says John McMahan, an Atlanta-based senior adviser at The Hackett Group, a business advisory firm.
And even with the recent proliferation of software tools that allow managers to do much of the number crunching themselves, management reports remain stubbornly thick and unwieldy. According to a survey of 400 large companies worldwide undertaken by Hackett last year , finance teams report an average of 132 metrics to senior management each month. That’s far too many, notes McMahan. “Most management reporting is a function of the data that is available, rather than the information that is actually needed.”
What’s more, such reporting tends to put too much emphasis on historical financial performance: in Hackett’s sample, 83 metrics were financial and 49 operational. The preponderance of financial measures is to be expected as it’s what finance understands best and what it’s most comfortable with, notes Anders Hägg, controller of Unilever BestFoods Nordic, a €400 million ($481 million) division of the Anglo-Dutch consumer goods giant. But that doesn’t necessarily help managers who could use better insights into trends and exceptions within their businesses. In addition, the cost of preparing, analyzing and checking this information is often a major burden on finance. “It’s a common issue among multinationals,” says Hägg. “We basically spend too much time producing numbers, and too little time analyzing and taking action.”
The Numbers Game
That’s why Hägg and the rest of the regional finance crew at Unilever are making efforts to cut down the volume of data produced, while putting more weight on forward-looking internal and external metrics such as regional sales forecasts, market share, competitor pricing and broader economic indicators.
Hägg has pioneered this new approach since returning to Sweden in 2003 after a stint in management accounting at Unilever’s offices in Mexico. At that time, data was submitted through several reporting channels in Denmark, Finland, Norway, and Sweden, and consolidated into one Nordic package, but “actual usage was at best average. We wanted something to support our growth agenda while giving us interactive analysis capabilities, providing a common approach to financial analysis and also communication.”
To get there, Hägg used a tool from U.K. vendor Metapraxis, Empower.NET. Now, each month the managing director and CFO of each country receive a simple, ten slide executive summary that doubles as an interactive dashboard, through which information can be filtered and personalized. What was once a thick, static batch of reports is now “lean and dynamic,” he says. “It’s a one-stop shop for information, a way for senior managers to find all relevant strategic and tactical information in a standardized format.”