Ak szczeczin 1109 one page only-eng

Internationaler Controller Verein eV | Herwig Friedag | 2011 | Seite 1

One page only –

Reports for decision makers.

Controllerverein.com

this way.

ICV work group Szczecin 2011-09-09


One page only –

Reports for decision makers

.

Controllerverein.com


or that way ?


„What’s not to summerize

on only one page,

is neither well thought off or

well prepared for decisions."___________________

Dwight D. Eisenhower


Independent consultant focusing on:

Implementation of Balanced Scorecard incompanies

Workshops on Balanced Scorecard

Internationaler Controller Verein eV

head of the PR committee at ICV

Visiting lecturer at Humboldt University in Berlin andDanube University Krems (A)

Hobbies: discovering the New, travels, bicycle tours, enjoying the nature, volleyball, sailing

Herwig R. Friedag

Dr. Herwig R. FriedagFriedag Consult

Beskidenstr. 33, D 14129 Berlin

Fon +49 30 80 40 40 00

Fax +49 30 80 40 40 01

consult @ friedag.com

www.friedag.com

Born in1950, Dipl. Volkswirt, Dr. rer.pol.

Internationaler Controller Verein eV | Herwig Friedag | 2011 | Seite 5© Friedag / Schmidt 2011 5

One page only

01 Ideas for good reporting

02 Customer’s data requirements

03 OPO examples

04 Graphics or numbers?



Sense and aim of reporting is:

o creating transparency,

o generating management-relevant data

o preparing and providing every user

with management-relevant data

to make a goal-oriented decision within the company management

Report’s tasks



Reporting should be oriented on data requirements of every single

report’s recipient .

A compact, understandable and meaningful reporting system is here

a condition for acceptance and application on all recipients.

Sense of reporting



Depending on time period, reports can be prepared e.g.

daily, weekly, monthly, quarterly or annually.

They list the current data and vizualize and comment

the differences from earlier periods / plans.

Frequency of a report



In particular for controller, the reporting is an important tool for

planing and coordination, because the numbers and analysis of the

past influence significantly the decisons about the future.

Therefore the transparency regarding finances is crucial for the

results and the strategy process.

Report’s content



Besides: each report costs money: costs of

- obtaining data,

- data processing and

- time for reading / understanding

Ask more often: How much does this report cost?

Is it worth it?

Report’s costs



No more than 7 information units for the recipient

Why7 ?

The reason could be the importance of seven in people perception.

It origins from the field of cognitive psychology. Seven is called

Miller’s magical number seven.

Already more than three hundred years ago John Locke

discovered so called „seven phenomena“ when he studied

inteligence of an adult. He claimed that the test people (seeing

many object for a short moment) have the score of almost one

hundred percent, if the number of objects is lower than seven. By

more than seven objects is the score much lower.4)

4) Z. Giora: The Magical Number Seven. In: D. Robert (Hrsg.): Occident and Orient-

Budapest 1988. S. 175 ff.

from: http://de.wikipedia.org/wiki/Sieben

Reporting requirements



Our short-time memory

Why7 ?

The Miller’s magical number seven describes the fact discovered by

George A. Miller: one person can simultaneously keep only 7±2 information

units (Chunks) in mind for a short time. The size of short-time memory is

determined genetically and cannot be improved by „training”. 1)

1) http://de.wikipedia.org/wiki/Millersche_Zahl




Quantities clear for people

functioning in practice 1)

Methods to handle with complex systems (see Fredmund Malik,

requirements management, software engineering) aim in breaking the

data into transparent units. The border of transparency is reached by

seven system elements.

Therefore different effects and recommendations can be explained:

Hierarchies are ineffective, when more than 7 co workers in the same

field have one superior.

When you pursue more than 7 goals simultaneously, you can loose the

overview.

Discussions with more than 7 participants are not so effective.

The structure of a document should not have more than 7 sub-headings.

A website should have maximal 7 menu items.

1) http://de.wikipedia.org/wiki/Millersche_Zahl




No more than 7 information units for the recipient

An information unit can also consist of information pairs

(e.g. strategic – operative, Input - Output)




How should the information units work? (coherence = consistency)

Reports must be

a) understandable,

b) manageable and

c) important

Provide only data, which are also

a) understandable for the recipient,

b) for which he’s responsible and

c) where he is capable of making decisions.

Reporting coherence



Indicators / Reports must be consistent

(= understandable, manageable and important)

How can you recognize it?

Set of examples:

a) understandable, - not understandable

b) manageable - not manageable and

c) important - not important

Exercise: Reporting coherence



Not too high complexity of data to get definite and clear results.

Requirements of the user: short and understandable: 7

always clear database

good communication basis thanks to clear

massages

(What should the site/ graphic reveal?)

quick analysis and decision time

Controllers’ responsibility:

He makes an initial selection of data included in the report.

He must check on the basis of his behaviour if the recipient has received / did

understand the massage .

He must dig deeper if it’s needed (Deyhle: „liebenswürdige Penetranz“)

Conclusion



One page only



03 OPO examples




Who is the controller’s customer?



Manager und Controller


Manager:

responsible for

business results,

finance,

processes and

strategy

Controller:

responsible for

business results,

finance,

processes and

strategy

transparency

Co

ntr

oll

ing


For every report it should be cleared, which recipient which

reports and data - when and really regular ? - needs and in

which aggregation the data should be provided.

The controller must know which decisions the recipient can make

on the basis of his reports

Perception of his responsibility

Being manager’s partner

Who’s the customer?



What wants, what „should” know the customer?


Which decisions are part of his responsibility?

transparent responsibilities

What is needed periodically (monthly, quarterly)?

not more than 7 parameters (or their pairs)

Parameters cost money

what is the customer able to pay?


Reports are not common statements –

that’s why it must be established with the

responsible manager before:

a plan (budget) with numbers

range for the goals

frequency of the statements as a basis for

decisions

Planning und data requirements



Strategic, operative and dispositive data – according to the

business model:

Strategic = develop: what potentials do we want to establish?

Operative = use: what do we want to achieve?

Dispositive = apply: what is the time order of potentials?

What data is important?


develop

use

strategic

operativ

apply

dispositive

necessary

potentialsavailable

potentialsneed for

development


spending money

cash inflowpotential inflow

develop exploit

orders / contract

use capacities

quality assurance

staff development

liquidity

partner’s disposition

marketing

develop capacities

quality potential

staff competence

investor relations

Partnership

strategic operative

potentialspossibilities

+skills

Exkurs: What is strategic, what is operative ?

do?do nothing?

long-term ? short-term ?



Strategic and operativ, optionally also dispositive data –

according to the business modell

Problem:

which goals could not be achieved / were even exceeded and why?

What measures will be taken - by whom responsible and until when

– to solve the problems?

Where is there need for decisions?

What data is important?



It depends on the resposibility of the manager

What is important for the manager, must be talked over with him

What data is important for a single manager?



Month reporting:

plan

actual

differences absolutely or

differences %

plan end of the year

forecast the end of the year

differences absolutely or

differences %

… and everything on one page? What can we reduce?

Exercise: a reasonable column layout



For every responsible manager usually only one report –

only one page with max. 7 information units (or their pairs)

Further analysis for demand

A report contains one page if possible

planned- and actual figures (as numbers or graphics)

Hints for deflections

Means to achieve the goal

need for decisions

What results from all this for controlling?



One page only



03 OPO examples




OPO – recommended structure

03 OPO examples


OPO examples: a football club

03 OPO examples


OPO examples: ICV-Public Relations

03 OPO examples


OPO examples: food industry

03 OPO examples


03 OPO examples

OPO examples: home unit company


One page only



03 OPO examples




Graphics or numbers

It is essential for reporting to provide homogeneous and binding

terminology: the same terms are important also when they appear

in different places. Different terms should be designated on a

different way.

Creating a homogeneous companies glossary is an important task

for a controller.

E.g. Hichert shows, how graphics should be constructed.

http://www.hichert.com



Graphics or numbers

Quelle: http://www.op-inside.de/page31/page6/assets/OP-Cockpit.swf



Graphics or numbers

source: http://www.hichert.com/downloads/consulting/schaubilder/044_798.pdf



Graphics or numbers

Source: http://www.hichert.com/de/consulting/schaubilder/310



…

What is better for whom?



More information:

http://isc.hs-heilbronn.de/Tools_Excel/ICV/ICV_15/opo_tool.pdf

http://www.hichert.com






Exercise: choosing a target customer - game

(employee / company)

company data

area of responsiblity

personality profile

Practical group work

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