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Top Management Performance Financial KPIs

Scott Gunn's Profile

top management performance financial kpisI would like to gather some insights as what people feel are the three to five main key financial metrics that are best to use in measuring and managing business performance. How often do you measure, monitor and report them? How do you determine the 3-5 key drivers for each one?Anything trending on the technology front in the world of financial analytics?


David OBrien
Title: Treasury Consultant
Company: EE Treasury
(Treasury Consultant, EE Treasury) |


Financial Metrics, are you seeking 3-5 that pertain to the entire business or are you seeking Treasury specific metrics?

David L. O'Brien, CTP

Mark Kirsch
Title: Vice President of Treasury
Company: ContourGlobal
(Vice President of Treasury, ContourGlobal) |


I would be very interested in hearing which Treasury specific metrics you would suggest I begin tracking.

Douglas Hare
Title: In Transition
Company: in-between
(In Transition, in-between) |


"Key" Financial Metrics are industry specific. For example, for one industry, Inventory Turns can be so important, it should be the most important metric. In another industry, concentrating on Inventory Turns may not make any financial sense at all. What industry are you in? If more than one, you may have different key metrics for each industry.

Douglas Hare, CPA (Inactive)

Richard Brown
Title: Managing Principal
Company: Princeton Risk Management
(Managing Principal, Princeton Risk Management) |

The prior responses are spot on - the answers are dependent on your industry sector (capital intensity); whether you are a manufacturer, distributor, etc.; and whether your are more focused on treasury metrics or broader. I would also add that whether your organization is public vs. private may also influence the prioritization of those metrics.

There are a few sources to get some answers. Off hand, start with the rating agencies and see which metrics they are tracking. Review SEC filings, IPO documents, and analyst reports for companies in your space. Lastly, some data for private companies can be obtained from RMA (Annual Statement Studies) or Dun & Bradstreet, along with several other credit oriented groups - some of which may be industry specific.

Best of luck.

Topic Expert
David Wittenberg
Title: Director of Financial Strategy
Company: World Vision
(Director of Financial Strategy , World Vision) |

Following in the comments from Douglas and Richard, the answer lies in your industry and strategy --generic metric will lead to generic performance (at best).

Per Jim Collins' book 'Good To Great', as an executive team you need to get a deep understanding to the question "What Drives Your Economic Engine" then form measurements around that (it may not be obvious nor come quickly). For example, Walgreens chose profit per customer visit and Wells Fargo chose profit for employee. Each was right for their situation.

Two cautions to accompany this discussion:
- Test every measure for potential distortions. Ask: If our folks were determined to hit the targets we set, are there destructive behaviors that would make the numbers look good but doom our long-term performance?
- Take what other companies are reporting with a grain of salt. Those may be perfect for them, but not fit your strategy. There's also the possibility they chose to disclose only metrics that make them look good.

Good Luck

Steve Breitman
Title: President/CEO
Company: Mindful Business Solutions
(President/CEO, Mindful Business Solutions) |

No matter what your industry is, I believe that 3-5 metrics is too few to provide much useful information. If your objective in using metrics is to know what's going on in the business and to keep it on track, you will have to draw on many metrics, most of which are not purely financial, in order to accomplish the goal. Areas such as sales, marketing, customer satisfaction and employee utilization are just as important as knowing inventory turnover. Even more important is having the ability to understand each metric in context of the others. You have to figure out the story the numbers are trying to tell and then be able to use that information to take profitable action.

Topic Expert
Rex Jackson
Title: EVP and Chief Financial Officer
Company: JDS Uniphase
(EVP and Chief Financial Officer, JDS Uniphase) |

Good questions/comments above.

I don't think there's a great mystery in compiling the list, and it does indeed depend upon the type of business. At my last company, a software company, we tracked, among other things, backlog and renewals carefully. Inventory turns were relevant in a small portion of the business (non-software) there, but are critical in my current, manufacturing oriented business.

What I would like to add/emphasize, is that you should make sure you develop trend data, benchmark your metrics against other is your space/size range, and try to go all the way to conclusions and recommendations. I have seen way too many charts of numbers and way too few places where Finance not only reports but also analyzes and guides. If you can help your company understand key trends and your financials compared to others who are best-in-class and suggest areas of focus, then you'll be adding real value.

Dan Jebens
Title: CFO
Company: ToolWatch Corp
(CFO, ToolWatch Corp) |

I think David touched on something important. You should start with what you want to achieve at the company and align the metrics to report that. As a SAAS software company we want to drive the value of the business up. For our company this means growing our recurring revenue stream while still remaining profitable (we are past the startup phase). So we have metrics around growing recurring revenue. We also have a metric for working capital created/spent for the month based on cash flow not net income(sales not revenue). Our third critical measure is renewal percentage which really should be customer satisfaction if we had a reliable way to gather the data.

The 3 critical measures are a pretty good overview of the business but it doesn't always give us what we need to properly operate the business. So we also have another level of metrics to help properly allocate funds to areas of the business to help create growth. Here we look at things like cost per qualified lead generated, % of leads converted, support calls opened/closed/# open, etc. You can certainly go overboard but functional areas of the business will have certain things that need to be monitored that have a direct impact on the top level metrics. To me the second level metrics are the why behind the what of the top level.

Now if you can just rally the employees around moving the metrics the right way you will really be on to something....

Topic Expert
Ric Ratkowski
Title: Vice President Strategic Alliances
Company: TopOPPS
(Vice President Strategic Alliances, TopOPPS) |

The attached link:

(hopefully it isn't blocked) is on the AICPA website and was developed by Gartner as a framework for deriving your key metrics. (it is 18 pages and highly summarized from the original 77 page whitepaper).

I agree with many of the comments above, it is different for different industries and a function of what you are trying to accomplish. Our CFO started by asking each of us in the executive management team what we should be measuring and then we continually refine it as we find:
1) the actual results don't support the KPI
2) we drill to lower level metrics for better management at the execution level

I think the key is to start measuring to help start to evolve a performance driven culture and get the systems/habits in place to get the measures on the appropriate desktops with the appropriate attention, then revise and refine.

Patty Midkiff
Title: Director, Finance
Company: Dynalabs, LLC
(Director, Finance, Dynalabs, LLC) |

It seems the link is blocked for me. I work for a pharmaceutical testing organization. I just started with the company so don't have the tribal knowledge of this business. Executive Management team has asked for a monthly KPI reporting spreadsheet(s). Do you have any suggestions for me?

Ellen McIlhenny
Title: CFO
Company: Cobb Technologies
LinkedIn Profile
(CFO, Cobb Technologies) |

Many industries have trade organizations that not only discuss which metrics are important, but give you the benchmarks that you should strive for. We find it very helpful in driving each area of the business.

Dan Everett
Title: Director of Marketing
Company: SAP
(Director of Marketing, SAP) |

There is a site called KPI Library that lists KPIs by industry, process (finance, sales, etc) and framework (COBIT, SCOR,etc.

Christine Speedy
Title: Global Business Development
Company: CenPOS
(Global Business Development, CenPOS) |

I agree with all of the above and would like to add some specific examples that multiple clients are using within the narrow scope of electronic payments. These metrics are custom created with an integrated report writer and distributed automatically via email to a group list. They decide the who, what, and when- options are limitless.
1. Refunds over $500. Why? This indicates customer dissatisfaction (or fraud risk).
2. Percent of eligible debit converted to pin debit. Why? If 82% is the average pin debit and the number drops, there could be an unreported hardware or personnel problem.
3. Refunds to the same card number exceeding a specified number. Why? A key trusted employee could place small refunds onto a card and go undiscovered.
The above are in addition to common standard payment metrics merchants have access to in real time.


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