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This article was translated from our Spanish edition using AI technologies. Errors can occur due to this process.
The opinions expressed by the entrepreneur's contributors are their own.
Editor's Note: The following excerpt is from the book Total Alignment by Riaz Khadem and Linda Khadem.
The three reports every manager should use are part of a reporting system first described in our book One Page Management. They are ideal for tracking alignment in an organization. Let's take a closer look at what these three reports can do for you and your teams.
The focus report
The focus report shows an employee's performance in relation to the actual status of each process indicator assigned to them. The "status" of these indicators is the number that shows the result of the indicator in the previous reporting period. For example, let's say the metric on a scorecard is Customer Response Rate and the response rate for April was 3 percent. The status of this metric in your May Focus report then shows that the employee performance in the Status column is 3 percent. This way, you will learn how your employee is behaving and you can align their efforts to improve the indicator.
If your status is assessed on the basis of some agreed criteria, you can determine whether it was "good" or "bad". We like to use goals to set these criteria. For each critical factor on a scorecard, you set three target levels: minimal, satisfactory, and excellent. The minimum target is the level below performance that is unacceptable. The level at which you are comfortable with your performance is satisfactory and the level of excellence is outstanding.
For some factors like "number of units produced" more is better. For other factors like "scrap percentage", less is better. For this reason, you should set a "minimum or maximum goal". This will help you determine that acceptable performance is above the minimum level or below the maximum level, depending on the type of factor. With these criteria you can determine three scenarios:
1. Outstanding performance when the status is better than the goal at hand.
2. Good performance or positive exception if the status is better than the satisfactory goal.
3. Poor performance or negative exception if the status is worse than the minimum target.
In addition to "Status" and "Goals", "Trend" is other important information. The trend shows whether an employee's status is getting better or worse. For example, your last month's performance could be worse than the minimum, but the trend over the last five periods could be good. On the contrary, last month's performance might be better than satisfactory, but the trend might be poor. This is useful information.
Filling out focus reports for your employees is a worthwhile exercise. That way, you can more accurately reflect the success factors you've assigned them, the formula that defines them, the data that goes into your calculation, and the positive action they require.
The feedback report
The second report is called the Feedback Report. This report is a summary of the "good news" and "bad news" based on the status of your employee's indicators. It shows the factors that have fallen below the unacceptable range of the state and those that are above the satisfactory level. Those in between the two are considered to be in the acceptable range.
This report also shows the number of periods in a series when the factor was better than the satisfactory goal or worse than the min / max goal. You can see the feedback on your performance at a glance. You are trying to generate feedback reports for each of your employees. Look at each factor in your focus report and compare its status to the goals you have set for them. Think if it is better than the successful goal or worse than the minimum / maximum goal. You also need to consider how many times in a row this factor was better than the successful goal or worse than the minimum / maximum goal.
The management report
As a manager, you need to understand the reality of what's going on in your responsibility pyramid, bottom-up and top-down. To do this, you can study the individual focus reports of those who report to you directly and indirectly. However, this can be time consuming and ineffective. To provide you with more useful insights into performance, there is a third report, the Management Report, which gives you a quick overview of the high points of the feedback reports from everyone in your accountability pyramid, the people who inform you directly and indirectly .
This approach is "Management by Exception". What does that mean? People working in the acceptable range will not appear in this report. They are doing a satisfactory job, and at this point you hardly need to worry about their individual performance. But both stars and those facing challenges will show up. This report looks for exceptions at both ends of the service spectrum. Obviously, reporting all exceptions in the management report would saturate this report and reduce its effectiveness. An escalation scheme is therefore integrated into the reporting system to determine which exceptions are brought upstream.
Based on a customizable escalation rule, positive and negative exceptions increase when they recur. The rule we recommend is that two or more consecutive exceptions are worse than the min / max level or above the satisfactory level to advance to the next level. In addition, the speed of the ascent depends on the importance of the factor. Some can advance to the next level quickly after three consecutive exceptions, others more slowly.
The reason for the escalation rule is that, for example, a manager who has a discount problem may have little time to resolve it. If not, notification of the problem will escalate. The boss has a set amount of time to fix the problem. If the problem persists, the next level will be alerted and so on. If the problem is serious and no one seems to have the answer, the most important person in the organization will find out. Most likely, the problem is systemic and beyond the control of the guilty manager. If the problem shows up on your management report, you know everyone has tried to fix it. Now is your chance to resolve the problem.
You also get good news: With the management report, the performance is transparent. Outstanding achievements are reported to the top and the right person is recognized.