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Every business or organization has SMART goals and projections they strive to meet by the end of certain intervals.
These goals and targets are based on executing projects and implementing well-documented strategic objectives.
Smart organizations also cascade these goals and projections to every staff and department.
Performance reports express or show how well (or otherwise) a company or related entities accomplish their goals within a specified period.
Performance reports are super-important for businesses and organizations at all levels. As Peter Drucker famously said, “You can’t improve what you don’t measure.”
In this article, we take a deep dive into performance reporting, including the types and step-by-step instructions on creating one.
Why is it important to create performance reports?
The benefits of performance reports include:
Aiding decision-making: Empowers leaders to make strategic decisions based on insights extracted from data.
Transparency: Breeds a culture of trust through transparent appraisals and evaluations. Can serve as a reference for present and future appraisals.
Communication: Helps you share updates on projects with relevant stakeholders.
Identify gaps: Performance reports help you to take stock and answer vital questions. Are we doing great financially? Are we on track to complete the project within the stipulated timeline? Are employees or departments meeting their agreed key performance indicators (KPIs)? Are the strategies we adopted working? The answers to these questions help you identify areas of underperformance from a strategy, employee, and department point of view.
Regulatory compliance: Regulatory agencies require some performance reports. For example, the IRS requires nonprofits to file an annual information return. Regularly creating performance reports make it easy to file such notices.
Comparison with industry-wide standards.
You may also like: The Art of KPI Selections
How to make a performance report?
Performance reporting is both an art and a science. These reports require digging into data, contextualizing data, creating visualizations, and tying everything together cohesively and intuitively.
To create a performance report, these are the steps to take:
1. Define the target audience and the objectives of the report
Who are you preparing the report for, and why? The target audience typically determines how you present the report. Oftentimes, reports to C-suite executives provide a high-level overview, except if they request otherwise.
The target audience may also stipulate the content of the report. For example, the SEC specifies what companies must include in their Form 10-K or annual reports.
Also, clarifying the report's objectives ensures that you stay on track and only include information and data points relevant to the end goal.
2. Source for data
Now that you know the objective of the report, it's time to pull together all the data and information you'll need.
You can think of this step in three phases:
Ask
Prepare
Process
Ask Phase
In the "ask" phase, you ask questions and elicit information. You use this step to gain clarity on what to include in the report. You can ask the parties you're preparing the report for what they want to see in the same.
Prepare phase
In this phase, you collect all the data you need. The data may exist in multiple sources and various formats. Some may be in the database, on Excel sheets, or a SAAS product.
Process phase
In this phase, you prepare the data for analysis. This step includes cleaning the data, manipulating data, ensuring columns have the correct formats and data type, and more. This step ensures that the result of your analysis and evaluation is reliable.
3. Analyze the performance data
In this step, you’re evaluating key performance indicators and major metrics related to the report’s objective. You’re benchmarking against industry standards. You’re computing percentages, ratios, year-on-year growth, and more.
It’s also a good idea to have a categorical rubric (such as Excellent, Very Good, Good, Poor, or Very Poor) for assessing qualitative data and non-financial quantitative data.
This is also the step where you create your visuals. There are a few considerations when designing visualizations, such as color, choice of graphs and charts, labels, headlines, accessibility, and more.
We won’t dwell on that in this article, but note that your choices impact how someone interprets the visuals. For example, it’s better to present business performance over time as a line graph rather than a bar chart.
4. Determine performance status
Determination of Red/Yellow/Green status should be based on organizationally accepted standard definitions.
In general, Green means that the team is satisfied with the current project performance and expects it to continue. Yellow means the current performance falls short of expectations, but actual progress is being made.
Red means the current performance falls short and requires initiatives and resources to drive improvement.
5. Gain more context
Return to relevant parties to discuss the results with them. During this stage, you can challenge all your assumptions and theories.
The affected parties can provide the “Why” behind some of the numbers. Data without context is practically worthless. Why did the project get delayed? Why did we have more product rejects or complaints this month?
6. Summarize and compile report
Summarize and compile the report with the appropriate amount of details as required by the stakeholders.
Some stakeholders will request a high-level overview, while some will prefer a deep-dive performance assessment.
The latter group wants to know the why, when, how, what, who, and the solution, while the former group simply wants to be informed about the status quo.
7. Proofread the report
Check for grammar and spelling errors. Ensure that you've written the report in a cohesive font.
Check the headers and titles of all graphs and charts to verify they correspond. You can seek a second opinion to ensure you're on the right track.
What performance reports should include
There are different types of performance reports with numerous requirements. That said, most performance reports should include
Stakeholders: Include names, departments, and roles of all relevant stakeholders.
Executive summary: A quick summary of what the report entails and key findings.
Past performance: Past performance to compare with current performance.
Established goals: The goals set for the objective or project in question e.g., “Reduce call the average handling time of the customer service department by 50%.”
Current performance: What is the current performance of the chosen KPIs or objectives?
Summary of changes: By how much does the current performance differ from past performance and the established goals?
Projected future performance: Based on the current trend, what’s the projected value of the KPIs in the short, medium, and long term?
Next steps: This could be anything from sitting down with the relevant parties to developing a strategy for identifying gaps in training and much more.
Types of performance reports
The most common types of performance reports include:
1. Status report
Status reports provide updates on a project’s current standing. These reports show if deadlines and milestones are being met.
They are in the format of, “We’ve completed XYZ and are on track to complete the project as stipulated in the project documents.”
2. Progress report
These reports are more detailed than status reports. While status reports focus on checkpoints, planned progress reports focus on the work done to move from milestone to milestone.
3. Trend report
Trend reports track and compares performance over a period. You can extend the analysis to estimate the future performance of the metric or KPI.
These reports can be used to highlight key points where performance changed over time and perhaps deduce what caused the uptick (or downward spiral) in performance.
4. Variance report
Variance reports are typically authored in the accounting domain, although they can be extended to other niches.
They show the difference between budgeted income and expenses and the actual figures reported by the company within a period.
Each line item includes the number and percentage difference between the projected and actual numbers.
You can apply the same theory to other scenarios.
5. Earned value report
Earned value management techniques help evaluate project progress comprehensively. These reports include details such as planned expenses, the actual cost of the project, the amount of work completed, cost variance, and schedule variance.
Performance report examples
Examples of performance reports include:
A state government publishes a report detailing its budget and services rendered by all the departments.
An employee receives their quarterly appraisal report showing their activities against their original action plan.
A project manager prepares a status report for C-level executives detailing cost, time overruns, and project milestones.
Takeaway: Great data insights lead to great thinking!
Performance reports are essential to a company or project’s existence. They have many benefits, including aiding decision-making, fostering transparency and trust, facilitating communication, closing strategic gaps, and ensuring regulatory compliance.
Performance reports help leaders stay on top of the company’s strategic goals and ensure all staff are contributing to the objectives. This ensures there is an efficient use of resources and there are no laggards.
Performance reports can be time-consuming when done manually. From cascading company objectives to teams to collecting data and cleaning data from multiple sources, it can be energy-draining.
Kippy takes away the stress in performance reporting. Kippy is a solution that helps you capture all you need for performance reports under one roof, with strategy at the center of everything. Request a demo today to get started.