39 Confusing Management Reporting Terms Defined

Every industry has its jargon and “shop talk,” and management reporting is no exception. If you’re new to this world, you’ve likely heard every term below but haven’t found a clear, concise definition of most. Consider this your cheat sheet, so you can “talk the talk” as well as the next guy or gal.

Here are the terms in alphabetical order.

Accountable: The individual or team responsible for completing a particular project or initiative. The accountable person(s) should be able to ensure the successful completion of the project or initiative.

Balanced Scorecard: A strategy management framework referred to as “the BSC” or simply “a scorecard,” created in 1992 by Drs. Robert Kaplan and David Norton. It describes strategy through the use of interlinked performance measures (see definition below) using four “perspectives”: Financial, Customer, Internal Processes, and Employee Learning & Growth. Despite its age, the BSC remains a very popular and relevant communication tool.

The Balanced Scorecard is made up of the following elements:

• Strategy Map, which shows the strategy on one page.
• Perspectives, which consist of 4-5 groupings of objectives.
• Themes, which are groups of strategic objectives.
• Objectives, which are the key elements of your strategy.
• Measures, which measure your progress against your objectives.
• Targets, which define the level of performance needed.
• Initiatives, which are the projects required to meet your targets.

See Also: A Full & Exhaustive Balanced Scorecard Example

Benchmarking: The comparison of similar processes across organizations and industries to identify best practices, measure progress, and set targets for improvement. Benchmarking results may serve as targets for Balanced Scorecard measures.

Business Intelligence (BI): A business tool, often in the form of software, or technique that takes scattered data and turns it into useful information. It’s great for slicing and dicing, but it also has its downfalls.

Business As Usual: An activity that would happen on a regular basis that would not regularly need to be discussed during management meetings.

Cascading: Getting everyone in the organization on the same page. It’s the process of aligning your strategy from the enterprise down to the divisions, and then down to the departments. For example, a call center Balanced Scorecard could be based on a sales and marketing business unit scorecard.

Cause & Effect Relationship: The way you would describe the interaction from one perspective (see definition below) to another. They are the “if/then” statements that underlie your strategic assumptions. For example: If we can increase our employee training (Learning & Growth), that will lead to an increased conversion rate (Internal Process), which will lead to more loyal customers (Customer), which will drive increased revenue (Financial).

Critical Success Factor (CSF): A brief statement that explains a specific element the organization must achieve: a high-level goal critical for the business to meet. To be effective, a critical success factor must be vital to the organization’s success, benefit the entire organization, and link directly to an organizational strategy.

See Also: How To Determine Critical Success Factors For Your Organization

Customer Perspective: One of the four standard perspectives used with the Balanced Scorecard. Objectives are developed in an organization based on the answer to two fundamental questions:

1. Who are our target customers?
2. What is our value proposition (see definition below) in serving them?

The role of the customer perspective is often elevated in public sector organizations and non-profit applications of the Balanced Scorecard.

Dashboard: A business intelligence (BI) structure that provides better visualization for a large set of data. Dashboards are important for capturing how your organization is performing and are great for repeatable processes.

See Also: Dashboards Vs. Scorecards: Deciding Between Operations & Strategy

Data Visualization: A subset of business intelligence, allowing for data to be transformed into charts, graphs, and other visual information. Qlik Sense, Tableau, and Crystal Reports all have strong data visualization capabilities, and are worth noting.

Employee Learning & Growth Perspective (L&G): One of the four standard perspectives used with the Balanced Scorecard. Sometimes called the “People” perspective, L&G focuses on the people who make up an organization. This perspective helps companies understand that their organization is made up of tens, hundreds, or thousands of individuals, and if these individuals are performing well, then every other perspective will benefit.

Financial Perspective: One of the four standard perspectives used with the Balanced Scorecard. While the Balanced Scorecard is unique in that it looks at four perspectives, it still looks at the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. Often there is more than enough handling and processing of financial data, and a corporate database may help centralize and automate more of it. The point is that the current emphasis on financials leads to an imbalance in regard to the other perspectives.

Human Capital: The assets you have in people. This may be considered a metaphor for the transition in organizational value creation from physical assets to the capabilities of employees. Human capital acknowledges the skills, relationships, and knowledge brought to the table by employees. It is closely related to terms such as "intellectual capital" and "intangible assets."

Initiatives: A key action program developed to achieve your objectives and close the gap between your measures, performance, and targets. Initiatives are also called actions or activities. At any given point in time, an organization will have 0-2 projects underway per objective (and between 10-15 major projects underway altogether) to close these gaps. These initiatives should be strategic in nature, and not business as usual (see definition above). Examples include:

• Develop Quality Management Program
• Install ERP System
• Revamp Supply Chain Process
• Develop Competencies Model

Internal Processes Perspective: One of the four standard perspectives used with the Balanced Scorecard. Sometimes shortened to the “Process” perspective, this looks at product leadership, customer intimacy, and operational excellence.

Lag Measures (Lag Indicators): The outcomes of lead measures. In other words, lag (or lagging) measures track the outcome of an objective that indicate company performance at the end of a period. These are result-oriented and do not reflect a process. Examples include:

Lag indicators often appear in the Balanced Scorecard’s outcome-oriented Financial and Customer perspectives.

Lead Measures (Lead Indicators): These track the activities you’re doing in order to achieve a particular outcome. These measures are considered the "drivers" of lagging indicators (see definition above). There is an assumed relationship between the two which suggests that improved performance in a leading indicator will drive better performance in the lagging indicator.

For example, spending more time with valued customers (a leading indicator) is hypothesized to drive improvements in customer satisfaction (a lagging indicator). The thing that makes lead and lag measures confusing is that the same measure can be a lead or a lag measure.

Depending on where you are and what you’re trying to measure within your strategy, a lead measure is going to track the activity or input into the strategy and the lag measures are going to measure the output or outcomes.

Logic Model: Follows the logical flow of how your strategy works. If we’re a car manufacturer, and we build the most dependable and stylish vehicle, people will buy it. The logic model of some soda companies is to associate their drink with happiness, so when people want a soda, they’ll buy from them over another brand. These can be very useful for describing organizations and programs (for example, in grant proposals).

Mission Statement: A mission statement defines the core purpose of the organization—why it exists. The mission examines the "raison d'etre" for the organization beyond simply increasing shareholder wealth and reflects employees' motivations for engaging in the company's work. Effective missions are inspiring, long-term in nature, and easily understood and communicated. Mission is not synonymous with values (see definition below), but the two are often confused.

Monitoring & Evaluation (M&E): Used to manage and report on a program you have in place. M&E systems (as they’re often abbreviated) are similar to, and often compared to, strategy management. The tool that would be used for an M&E system would be a Balanced Scorecard or another strategy management framework.

Objective: A high-level organizational goal. Objectives are concise statements that articulate a specific component of what the strategy must achieve, and what is critical to its success. When you create an objective, you’re focused on what your organization is trying to accomplish strategically. Some examples include:

• Increase Market Share Through Current Customers (Financial)
• Be Service Oriented (Customer)
• Achieve Order Fulfillment Excellence Through On-Line Process Improvement (Internal)
• Align Incentives And Rewards With Employee Roles For Increased Employee Satisfaction (Learning & Growth)

Most organizations will have 10-12 key strategic objectives that will last 5-10 years.

Performance Driver: Measures that indicate progress against a process or behavior. These measures can help predict the future outcome of an objective (see definition above). Somewhat synonymous with lead measure (see definition above). Examples include:

• Hours Spent With Customers
• # Of Meetings With Cross-Functional Representation
• # Of Process Rework

Performance drivers often appear in the Balanced Scorecard’s process-oriented Internal and Learning & Growth perspectives (see definitions above).

Performance Management: An umbrella term used to describe methodologies and processes that help an organization manage its success. While performance measurement will help an organization weigh progress toward achieving predetermined goals, performance management builds on that process and adds relevant communication and action on the progress achieved against these predetermined goals. Performance management and measurement are not the same thing, and both are critical.

Performance Measures: The quantitative indicators put in place to track progress against a strategy. Typically good performance measures (synonymous with key performance indicators, or “KPIs”) cover all four perspectives (see definition below). Performance measures let you know whether you’re on track to achieve your strategy and accomplish your objectives.

Personal Scorecards: Performance management can sometimes mean “personal scorecards,” which can be confusing. You have to understand how you define your performance management process: are you defining it for individuals in your organization using performance management software, or for corporate performance management?

Perspectives: The set of four “viewpoints”—Financial, Customer, Internal Process, Learning & Growth/Employees—to a strategy, as represented by key constituents or stakeholders of that strategy. Perspectives are viewed horizontally, so each perspective represents the set of objectives desired by a particular stakeholder. The perspectives, when viewed together, help show a complete view of a business strategy and “tell the story of a strategy” in a clear and organized way.

Project Management: When properly executed, projects are aligned with an organizational strategy. The following questions must be answered in order for proper project management to take place:

1. “How do we define a project?”
2. “Are we managing the right projects?”
3. “How do we prioritize our projects?”
4. “Are our projects linking back to our strategy?”

Strategic Plan: When taken together, all of the Balanced Scorecard components represent a strategic plan. This form of strategic plan ensures the linkage between an organization’s strategy and its activities. It also ensures consistency across the organization from a framework and definitional standpoint. Strategic plans often take the following steps into account:

1. Core Mission
2. Vision Statement
3. Priorities
4. Communication & Rollout Plan
5. Accountability

Be sure to check out this example of a municipal strategic plan for more information.

Strategy Map: A visual representation of an organization’s strategy and the processes and systems necessary to implement that strategy. A strategy map will show employees how their jobs are linked to the organization’s overall objectives.

Strategic Resource Allocation: The process of aligning budgets with strategy by using the Balanced Scorecard to make resource allocation decisions. Using this method, budgets are based on the initiatives necessary to achieve Balanced Scorecard targets.

Stretch Target: Represents the goal at the end of a strategic planning cycle. If you have a five-year plan, the stretch target can be the goal at year five. The regular targets would be all of the interim targets leading up to that plan. Thus, you would have year one quarterly targets, and then years 2-4 annual targets that all build to the stretch target. If you don’t have a stretch target (as well as annual and quarterly targets) mapped, then you end up not being able to achieve your strategy.

Target: This represents the desired result of a performance measure. In other words, what are you trying to achieve? Targets make meaningful the results derived from measurement and provide organizations with feedback regarding performance.

Theme: A descriptive statement representing a major component of a strategy. Most strategies can be represented in 3-5 themes. Themes are most often drawn from an organization’s internal processes, but may also be drawn from key financial goals. Themes represent vertically linked groupings of objectives across several scorecard perspectives (typically Customer and Internal) (see definitions above).

Themes are often stated as buzzwords or shop-talk-type words or phrases that are easy for the organization to remember. Examples include:

• Top Innovator
• Customer Intimacy
• Operationally Excellent
• Processes/Tools
• Thinking
• Content

Understand that themes can cut across perspectives, but are not synonymous with perspectives. Perspectives talk about a specific area of the business, and a theme is a way to group activities.

Value Proposition: A value proposition is the unique mix of product, price, service, relationship and image that a provider offers its customers. It determines which market segments need to be targeted, and how an organization will differentiate itself in those segments (relative to its competition).

Values: Represent the deeply held beliefs within an organization. Values are demonstrated through the day-to‐day behaviors of all employees. An organization's values should ideally make an open “proclamation” about how it expects everyone to behave. Note that values can be confused with mission (see definition above), but the two are not synonymous.

Vision: Provides everyone in the organization with a shared mental framework that helps give form to the future that lies ahead. Effective visions provide a “written image” of what the organization intends ultimately to become, which may be five, 10, or 15 years in the future. This statement isn’t abstract; it is easily understood and straightforward. As such, it is the basis for formulating strategies and objectives.