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Date: 2024-06-16 Page is: DBtxt003.php L070-MA-MANAGEMENT
Management is all about 'moving the needle'. It is a process.
Making the right decisions matters
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Having a strategy
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Having a set of coherent goals
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Having an operational plan
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Having oversight that identifies and resolved problems
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Having metrics that make good management possible
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Having metrics that make good management possible
Many critical metrics are missing. There are no metrics in widespread use that capture the impact on people and planet from economic activity, especially large scale economic activity implemented by corporate organizations.

Better metrics are needed everywhere ... not only data from the profit perspective of the corporate organization, but from every perspective, and there are many including:
  1. For Profit Business Organizations .
    Most of the world's economic activities are carried out and/or controlled by big organizations. The scale is huge and the public in general is extremely badly informed.
    • Big multinational businesses with many products and complex supply chains and corporate structures;
    • Big businesses that operate in many jurisdictions;
    • Big businesses that operate in a single jurisdiction;
    • Small businesses that are important for a community;
  2. Not For Profit Organizations,
    • Not-for-profit organizations working on social issues ;
    • Not-for-profit organizations working on environmental issues ;
    • Not-for-profit organizations working on political issues ;
    • Religious organizations ;
  3. Governmental Organizations,
    • National level government (Legislative) ;
    • National level government (Executuvew Ministries) ;
    • National level government (Judiciary ) ;
    • State and Provincial Level Government ;
    • Local Government
  4. Place.
    • Very little data are available about the impact of economic activity on a place, and the progress and performance of the place.
    • The systematic organization of data to optimize progress and performance of a place is almost completely absent even though place has an outsize influence on the quality of life of people.
  5. Product.
    • Very little data are available about the impact of a product or service on people and planet, though there is a huge amount of corporate advertising and PR about the product
  6. Process.
    • It is improvement in 'process' over the last 150 years or so that has been the most important driver of economic and social progress. While there is a lot of uninformed bluster about the terrible state of the modern economy and modern quality of life, much good progress has been made.
      An important and valid concern is that the distribution of progress enabled by improved processes has been badly distorted in ways that disadvantage too many and benefit far too few.
      Changing this should be a major priority for everyone at national level leadership around the world.
  7. Profit.
    • There is a very powerful system for reporting about profit performance but the reporting of impact on people and planet is very weak.
  8. Purpose.
    • There is no system of quantification of value so that impact can be measured with the same rigor that is used for business profit. The purpose of TVM is to change this.
  9. Perspective.
    • There are huge amounts of data inside the corporate organization, and there are substantial economic datasets within government. This may be useful for an academic elite, but as a source of management information for decision making, it is poor.
Business Performance ... Investor Perspective
Business Performance ... Economic / Technical Perspective
Business Performance ... Social Perspective
Business Performance ... Impact on Environment
Stock Market (Investment) Performance
Macro-Economic Performance
Place (Community) Performance
Individual Performance
Family / Household Performance
Management Accounting
Systems to manage corporate decisions to achieve a maximum of corporate profits are very powerful. There is effective measurement of profit performance not only in the aggregate but also at every stage of the many processes that 'add up' to the aggregate profit performance.

In the early days of management science, this took a lot of arduous work, but the development of powerful computers and all sorts of analytical aids, the process has become fast and relatively low cost.

The weakness of most conventional modern management information systems is that they are almost exclusively focused on profit performance, and do not embrace the 'triple bottom line' with anything like the same level of rigor and effective management metrics are almost totally absent.
TPB Note: From very early in my career if have always been of the view that the best management information is the least amount of data in the most timely way at a very low cost that enables decisions makers throughout an organization to make good decisions reliably on time and all the time.
Data, per se, does not improve performance. It is the use of the data to make good decisions, and the implementation of good decisions that improves performance. In my personal experience, the design of data collection and the feedback cycle can be a critical part of the management system with key actors implementing process improvement even before the data has flowed fully through the system and been incorporated into a formal process improvement!
Actual Cost Accounting -v- Standard Cost Accounting
Actual Cost Accounting is a very data intensive system, and surprisingly ineffective. In order to be useful, it requires a lot of analysis and considerable understanding of the underlying processes.
Standard Cost Accounting, and the associated variance analysis is less data intensive and far more useful.
I have used standard costing in a number of different situations. The technique makes it possible for engineers and production people and accountants to work together in a constructive way to improve the product, the process and the profit performance. When the unit standard cost multiplied by quantity does not agree with the total cost of a particular part of the process, then something is wrong and should be investigated, Either the standard cost is wrong or the production performance is wrong, and the investigation will show what needs to be fixed. When things get fixed ... performance improves and then profits.
Key Performance Indicators
KPI or Key Performance Indicators are a variety of measures.
I have not been enthusiastic about KPIs in my own work. Where I have seen them being used they were 'talking points' and not well integrated into the operational reality and the issues needing to be addressed. That is not to say that well designed KPIs cannot be effective, but that has not been my experience.
Stock Markets play a very important role in the financing of private initiatives for progress ... but what is the progress we need?
Stock Price Indices
The 'Dow' passed the 20000 mark for the first time on February 17, 2017 ... but what does this really mean? It is a rather arcane computation based on the closing price of the shares of just 50 large cap industrial companies.
The S&P 500 is a broader index more typical of all of the market.
Portfolio design
Many portfolios have been designed to give the most return in the shortest possible time no matter what the consequences for society at large. This investor behavior is encouraged by the typical financial analysis that has rigorous data about financial performance and essentially no data about anything else. Companies that choose to do good while earning a return for investors tend to be penalized to the extent that doing good conflicts with making more profit.
Portfolios that are designed to build value over time and be sustainable doing right for society and the environment are penalized because of the dominance of the profit metric and the absence of rigorous sustainability metrics and the impact on society and the impact on the environment.
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