Define Goals, Purpose, Key Performance Indicators, Frequency and Audience for Better Reporting
Timely and relevant information is critical for leaders of any organization. This improves decision making for our teams to chart contributions that are then recognized by our progress. It also gives better oversight into activities for boards that govern any organizations. This essay will examine general and specific goals, the purpose and pitfalls of reporting, and the considerations for the rhythm that gets critical information to relevant parties.
As organizations grow in size, complexity and relevance on a domestic and international scale we undertake the task of creating plans that reflect how we believe our world will unfold in a particular year, quarter, month, and week. Over the years planning gets more sophisticated as leaders accept larger challenges to meet increased annual objectives.
Most successful organizations center on the customer experience. We just know that the pursuit of financial goals without taking care of our customers is an empty pursuit. We then seek metrics that reflect that foundational commitment: great customer experience. To gauge our overall success, there are three overarching goals to orient on, which for the purpose of this article, we will call the Cardinal Goals. For the purpose of this article we’ll define those as:
Top Line Revenue: The amount of recognized billings according to audited GAAP rules. This answers the question whether an organization is seizing opportunities in the marketplace.
Profitability: Profit, or operating margin, which is the remainder of Top Line Revenue, minus all expenses. This holds us accountable for servicing our markets and customers in an efficient and renewable way.
Customer Retention: The number of customers who renew with us on annual basis. There is no clearer vote on whether the organization’s proposition is succeeding than when a customer continues to pay us for our products and services.
These measures of success are primary and all of the activities of the organization. in one or another affect these outcomes. The results can then form the basis variable compensation plans for every employee and manager in the organization, providing clear accountability based on the needs of the organization, on a quarterly and annual basis. Leaders are then responsible for these numbers and have the duty to ensure departmental activities help to positively effect these outcomes.
Iterative reporting on progress towards goals helps identify when the organization is under or over performing in pursuit of objectives.
This information is valuable to help accelerate or decelerate the pace of various initiatives and keep our focus on the required activities. Detailed reporting also tracks performance against objectives to keep resources allocated to teams so they can hit their objectives. This is a must for managing resources downstream as various organizations within a company grow. Lastly reporting shapes our understanding of how reality has matched our plans and how we might modify our future plans to reflect our observed reality.
There are potential problems with reporting. In order to get the most out of the dissemination of information, it is important to examine some of the potential pitfalls in what we report. While this is not intended as an exhaustive study, the two major areas many organizations face are incomplete measurements and the historical nature of reporting.
Many areas of organizations can go well, despite these efforts not being reflected in the financial performance. For example:
The major efforts done by development teams in quickly addressing new technical capabilities might be reflected in the number of attendees to listen to product announcements. This would have a long-term impact on new customers and financials but takes time for new leads to mature into paying customers.
Efforts that bring in new smaller customers where revenue isn’t recognized or where the customers need to mature once they are obtained (e.g. free months of a service or freemium product that haven’t crossed a threshold into billable customers).
Large events and marketing plans that won’t net new customers until later in the year (according to how long it takes for a customer to mature).
Bringing on partners and resellers that haven’t yet begun to transact.
These are just a few examples of the positive activities that could happen at an organization but they all take time to play out in terms of financial performance. So reporting data only informs us of where we have been as an organization and not necessarily where we are going, even when plotted on a trend line. Yet we need to provide a scorecard to our organizations so leaders can make decisions based on the best possible data.
Reviewing the numbers is something that all of us can do, but how does that in turn spur action, reallocate resources, or aid us in better planning? This is what is most relevant for leadership groups to discuss. Leaders should share successful innovations, seek advice from others, and ensure they have a common purpose and understanding of how the present can positively impact the future. This eventually leads to positive reporting of the past. And the conversation often begins with KPIs, or Key Performance Indicators.
Key Performance Indicators (KPI’s)
There are a lot of activities that roll up to the overall success of any organization. These efforts are decentralized into departmental efforts that each leader becomes accountable for.
These essential departmental contributions contribute to the organization’s three cardinal goals. The KPIs relevant to growing teams in many early stage organizations can then be mapped upward towards the cardinal goals. We’ll show a model, but that model will be different for everyone, so should be tailored to what is reportable for anyone implementing a similar model.
The model will never be complete but should be able to get narrowed down into a simple set of numbers, where leaders of each team agree on both the goal and the tactics. Senior leadership can then focus on tracking performance and change throughout the year. A good starting point for a growing software company might include the following;
Manage releases to commit dates based on the roadmap, including the approximate ship date of the next product
Quality of release as measured by post release bugs and an increase in calls to support teams
Success of release in the marketplace (did we actually sell what we created)
Coverage of features and code that has been tested and documented
Rolling product roadmap that aligns with strategic plan and innovates our offerings to meet changing marketplace
Unique Visitors and Page views
Customer satisfaction score(s)
Time to help vs. plan
Voluntary turnover %
Past due open jobs by department
New candidates in the interview process
Sales and Marketing
Closed sales as compared to the sales plan
Sales close rates
Total number of opportunities in the sales pipeline per sales stage
Total dollar value of current pipeline
Current and following quarter sales forecast
Reseller sales (by region)
Cost to acquire a customer
Cost to acquire a sales qualified lead
Cost to acquire a marketing qualified lead
Percentage of qualified leads per sales stage
Non-software sales (revenues from services and training)
Customer Service and Support
Retention (Monthly or for on premises, on-time renewal percentages)
Customer growth vs churn (in number of customers and dollars)
Case volume, trend and rates per staff
Average time to respond (phone, email)
Past due cases
As mentioned previously, the items each organization tracks can be different. They can also change each year as the organization’s needs shift. Above is a grab bag of areas to choose from, but they should be departmental metrics that provide a scoreboard for different departments and roll up to a cardinal goal of an organization. We can then place each of those cardinal goals into a standard four box reporting template and define which parts of the organization need to receive reporting on those.
The Four Box
The Four Box is a standard reporting template that has four boxes, each typically containing four attributes or scores. This allows for the cardinal financial objectives plus one that each of our organizations deems critical, often reflecting alignment with our own core mission and values.
The Four Box is just one way of visually aligning performance, and there are tons of other templates out there to use. But the key is to decide on a set of attributes and then remain consistent in their application throughout the year. These numbers should be based on raw performance metrics and not be allowed to be overly synthetic. For example, if the metrics are algorithmically derived then they can lead to missing certain key attributes that reflect a lack of performance in a critical area of the organization by masking it with overperforming in a less important area.
Different levels of reporting are appropriate for different audiences at different intervals. If we accept the premise that the purpose of reporting is for leaders to help focus teams, allocate resources, and modify plans the next step is how we address the reporting needs for our employees and the THE ORGANIZATION. . Board. For simplicity sake let’s break down our stakeholders as follows:
The Board of Directors (B)
Management Team (M)
The full organization (O)
So far we have identified two types of measurable activity: Cardinal Goals and KPI’s. Where financial performance is a goal, these activities are measured in a budget and are reported as such. We report against the budget at several intervals through the year. One example of the frequency of report frequencies and target audiences or stakeholders would be as follows (with the letter for the corresponding target audience identified) going from the least to the most frequent reports:
Annually (D, B, M, O): Performance shared and celebrated at an annual all-company meeting. This memorializes how the year went and often guides performance-based compensation when that is a factor in an organization.
Quarterly (D, B, M): Now that we have collected all of the data on a routine basis, the numbers can easily roll up to quarterly activity (e.g. into the slides necessary for reporting to the board of directors of an organization on a quarterly basis). This also provides a birds-eye-view for downstream performance by senior leaders as organizations grow and those leaders can’t maintain a connection with that level of performance.
Monthly (D, B, M): Distributed KPIs to the management team for review. Should provide a snap shot of all activities across the organization in a simple but drillable fashion (e,g. a Four Box with hyperlinks to raw reporting data). Provides a basic understanding of each teams activities towards the common goals of the organization. Allows for short term iterative objectives and work cross-team work.
Weekly (D, M): Departmental KPI’s at a minimum should be shared with staff to ensure common knowledge of their activities that are shared with the management team prior to bi-weekly meetings.
Daily (D): This is the domain of leaders with their respective departments. Examples of daily reporting might be a daily scrum team meeting (e.g. a standup), daily sales team meetings, a simple dashboard, or some other management framework that focuses teams and is done at the discretion of the team leader.
As we go beyond revenue outcomes (the Cardinal Goals) and turn our attention to KPI’s the details are a blend of reporting the progress made and the future activities that will improve that performance in the future. At each review we should not only cover the past, but what we will do to improve the results in the future.
As any. organization matures, we will find that what worked for us yesterday is insufficient for today. As we grow, we will hopefully all get to a point that we can’t just sit around a table to communicate how our teams are doing. Having a few simple, annual goals that get measured when the year is done is important, but drilling into the KPIs will keep us on track as the year progresses and offer a defined cadence to not only review performance but also to look to remediation or ways to outperform!
Our hope in providing this framework is that we can define a structure and some considerations to identify what is relevant and ensure we are communicating those in a timely fashion as organizations evolve. This should create a common understanding of high level and departmental goals and allow us all to better communicate with one another.
We want to help leaders adapt. We want to help our friends inform everyone from their board to their staff on an appropriate level of detail about the performance of the organization. And getting the right information to the right teams at the right times help each of us to not get flooded with information irrelevant to us while also being informed as to how we can maximize our impact and pivot where needed. Hopefully this article helps share some of our experiences in how to do that!