FP&A Trends: Measuring FP&A Performance with Key Performance Indicators (KPIs)

“So how can an FP&A function implement a good KPI framework?  First and foremost, the questions in formulating the KPIs should be tied to the strategic objectives of the business – the value drivers.  Once the right questions are selected for the KPIs, three foundational elements discussed below should be factored in building a strong FP&A KPI framework:”

• Reliable insights
• Accountability
• Quality data

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Gaining Actionable Business Insights Through Continuous KPI Reporting

As organizations continue to put greater emphasis on facts-based decision making, ensuring relevant measures and timely access to data becomes increasingly important. Often organizations will pinpoint a handful of key performance indicators (KPIs) to gauge the organization’s operational performance. The reporting structure for these KPIs is critical in allowing decision makers to the pulse of their business by identifying performance issues and drill-down to identify opportunities for improvement. Best-practice manufacturing organizations understand that consistently tracking operational and financial KPIs directly related to profitability and productivity are key in gaining actionable and accurate insights into their business.

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Value Creating With “Blue-Line” KPI Management

Organizations of all types rely extensively on key performance indicators (KPIs) to define and evaluate success.  KPIs are best used as instruments for organizational learning by identifying knowledge gaps that allow the company and its people to cope more effectively with a constantly changing competitive and technological landscape. A practice that is recently being disputed is “red line management,” where managers are driven to pursue inappropriate targets because they are tangible and they are incentivized on KPIs that while they are connected to value, do not drive it. A new concept that is being introduced to the finance world is “blue-line management,” an approach in which all decisions of consequence are made with one aim in mind: to create value for the organization. This approach stands in stark contrast to the more common practice of “red-line management”

Read More at Strategic Finance Magazine >