KPIs, dashboards and detailed analysis
Firstly, I would not use the term KPI. It is the word indicator that is potentially misleading - what does indicator mean?
A person or thing that indicates;
one that indicates, especially a pointer.
The presumption is that there will be some response to the indication, including no action as all is well. But we have endless KPIs often churned out with little thought given as to their use or whether they can lead to action to keep a tactic on its path or drive a strategy forward.
I think a better term is KPD, which could stand for key performance driver - a more positive notion than merely indicator, or better still, key performance deliverable, making it clear that the reported number is there to ensure delivery of a target or objective. The use of KPDs to encourage delivery of objectives is considered in Chapter 10 on budgeting.
Dashboards have been fashionable for a while and I await the business cockpit display; do we not need more sophistication in reporting? This cynical comment is given to make the point that if those who coin new terms just thought through the use of words, the real meaning might be quite inappropriate; for example, modern cars have indicators, lights, instruments etc on the dashboard which have little to do with safe driving, which is presumably what a dashboard is for. To manage tactics and strategies we need a few clear signals of how matters are progressing, not a plethora of at best tangential or, worse, irrelevant data.
Table 9.8 is an example from the Accor accounts of what internally will be in the form of detailed reports complete with the figures behind the summaries.
TABLE 9.8 Accor - top ratios
* Based on continuing operations: ie excluding Groupe Lucien Barrière, the US Economy Hotels business and the Onboard Train Services business which in accordance with IFRS 5 reclassified as discontinued operations.
** Based on continuing operations: ie excluding Groupe Lucien Barrière, which was deconsolidated in 2011, and the Onboard Train Services business, which in accordance with IFRS 5 was reclassified as a discontinued operation.
Note (a) Gearing corresponds to the ratio of net debt to equity (including minority interests).
Note (b) Adjusted Funds from Ordinary Activities/Adjusted Net Debt is calculated as follows, corresponding to the method used by the main rating agencies:
SOURCE: Accor (2012)
The key management ratios overview is analysed further by business type, as mentioned in Chapter 7; for the years in question the economy sector looks the place to be (Table 9.9).
Revenue and margins are then analysed by ownership type (Table 9.10).
Finally, there is an example of the detailed reports which you might need to track tactics, in this case of water usage and resultant cost (Table 9.11). As can be identified by the title, this also relates to Accor's objective of being environmentally aware and caring.
TABLE 9.9 Accor - top ratios by sector
* In line with IFRS 5 (see note 17), the EBITDA and capital employed of the Economy US Hotels and Onboard Train Services businesses were not taken Into account In the calculation of Group ROCE.
SOURCE: Accor (2012)
TABLE 9.10 Accor - revenue and margins by sector
P&L Performance for 2011 and 2012 was as follows:
(1) Including fees from owned and leased hotels. SOURCE: Accor (2012)
TABLE 9.11 Accor - published environmental data
* Hotels reporting data In both years. SOURCE: Accor (2012)