Dashboards Are Not a Secret Sauce for Sound Governance

Too often the use of dashboards does not clearly communicate the past and give signals for the future.

 

by Dan Busby and John Pearson

 

Not everything that can be counted counts
and not everything that counts can be counted.

 

“The dashboard that our board received from staff was very attractive. But with little context, we barely knew where we had been, and not much about where we were going,” one ministry board member said.

Ministries accumulate massive amounts of data. Some data is useful for dashboard presentations; most is not. Ralph Waldo Emerson’s words ring clear: “There are many things of which a wise man might wish to be ignorant.”[1]

Well-chosen data can tell a story. Are key measurements up, down, or at a plateau? Is the ministry healthy—not just financially—but in other key ways? What is the status of the CEO’s top five annual goals?

The starting point for measurement is not how creatively data can be presented. Effective dashboards begin with deciding which data elements—often called Key Performance Indicators (KPIs)—are most important for your ministry. (See the Rockefeller Habits Checklist, No. 9[2]) As business­man and board chair Max De Pree so aptly put it, “In my experience a failure to make a conscious decision about what it is we’re going to measure often causes discombobulation and a lack of effectiveness and a lack of achievement.”[3]

It takes data to create dashboards. Data requires simplification—generally by humans. And data becomes information only when it is shared in context. I will explain.

Let’s take a number—103, for example.

If 103 is the batting average of a bullpen pitcher, it is good. If 103 is the fielding average of your starting right fielder, that is bad.

If 103 is the annual percentage of the health insurance cost increase for your organization, that is good. If 103 is the body temperature of your one-year-old child, that is bad.

Without context, 103 means nothing. And, without context, dashboards are meaningless.

SEVEN DASHBOARD QUESTIONS. To generate effective dashboard information, ministries should answer the following questions:

1.    What data elements should be included in our dashboards?

2.    Do we have the sophistication to generate effective dashboards from our IT system?

3.    How can we reflect non-financial information in dashboards?

4.    How often should we prepare dashboards?

5.    Are we providing the proper level of context to explain the dashboards?

6.    Do our dashboards tell a meaningful story?

7.    Are we using the best dashboard presentation approach for our ministry?

Ministries should address all seven of these questions, but a mistake in answering #7 is a dealbreaker! Read on.

Our bookshelves are stocked with nearly every text written in recent years on the subject of dashboard reporting. The authors of these books wax eloquent on how to prepare every kind of dashboards imaginable—bar graphs, line graphs, dot plots, bullet graphs, sparklines, box plots, scatter plots, spatial maps, and much more. There are thousands of pages in these books that explain good dashboards and the bad—but all using graphical representations.

Here is the essence of what we have learned from the dashboard literature: Most of the dashboard guidance is designed for large organizations, with high-end software that can generate dashboards by sophisticated graph designers. We have found scant useable information for the modest-sized organization. 

So, we believe the question isn’t whether to dashboard or not. The question is whether to dashboard using or not using graphs. While the use of graphs from time-to-time is certainly not discouraged, we are convinced that most ministries are well-served to simplify their presentations using red, yellow and green dashboard signals and a columnar template approach.

Using a simple template concept like the one shown below, board members will quickly turn their attention to the areas needing attention and celebrate with staff where progress has been made. The use of Red/Yellow/Green helps the board interpret the material, and the inclusion of prior information provides even more context on the topic.

We have just included a few sample metrics in these examples. In our book, ECFA Tools and Templates for Effective Board Governance,[4] expanded examples are shown and the templates shown on the following pages are downloadable so you can create your own metrics to use with this template.
 

If your ministry has significant debt, it may be appropriate to display metrics such as debt service reserves (in months) or debt payments as a percentage of year-to-date revenue.

It is often difficult to communicate a summary of human resources-related data. This is why human resources data is usually not communicated to the board at all.

Summary. It is hard to imagine driving your car without quick, easy access to a speedometer, fuel gauge, or gear position. Without an effective dashboard, a ministry lacks a fast way to check on the basics so you can spend less time on where you have been and more time on where you are going.

 

BOARDROOM LESSON
_______________________________

The hard work in communicating data isn’t
in producing and sharing a vast quantity of it;
it is in selecting the right information to communicate
and then determining how to make the data tell the story.

  Board Action Steps:

  1. Agree: As part of the accountability process, the board chair and the CEO should agree on what data will be visually presented through dashboards.

  2. Communicate: Highlight the selected elements that tell an interesting dashboard story.

  3. Improve: Review dashboards periodically to determine how to improve their effectiveness.

 

Prayer

Lord, we don’t want to splatter the walls
with unending and overwhelming charts and graphs.
Help us simplify our dashboard reporting techniques
to enhance our governance. Amen.
 

 

 

 

[1] Ralph Waldo Emerson, The Complete Works of Ralph Waldo Emerson: Lectures and Biographical Sketches (San Bernardino, CA: Ulan Press, 2012), 21.

[2] Verne Harnish, Scaling Up: How a Few Companies Make It… and Why the Rest Don’t – Mastering the Rockefeller Habits 2.0 by (Gazelles, 2014), 170-71.

[3] Max De Pree, Leading Without Power: Finding Hope in Serving Community (San Francisco: Jossey-Bass, 1997), 47.

[4] Dan Busby and John Pearson, ECFA Tools and Templates for Effective Board Governance: Time Saving Solutions for Your Board (Winchester, VA: ECFAPress, 2019), 103–10

 

From More Lessons From the Nonprofit Boardroom: Effectiveness, Excellence, Elephants!, 2019, www.ECFA.org/KnowledgeCenter.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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