The difference between performance reporting and performance management

Shaun McCarthy
2 November 2015

I used to dread the end of the school year, the time when I had to present my school report to my parents.

It detailed all my misdemeanours over the year and usually contained comments of the “has the ability, must try harder” type, other than for PE where my lack of flair in any type of sporting endeavour was cruelly exposed by a stocky, Welsh, former army PT Instructor who believed rugby and cold showers were the path to righteousness for any young man.

But the truth is the school report made no difference to my performance; it just meant dealing with a few days of parental angst. The difference was made in the regular review and feedback on my work during the school year.

The same is true in the business world. A company’s annual report will show financial performance over the year, which is helpful for analysis of the company and setting the strategic direction but it is not what drives performance on the ground. This is done by budgeting, management accounting and continually exploiting opportunities and dealing with shortfalls throughout the year. This is the difference between performance management and performance reporting. Management looks forward, reporting looks back.

In my world of sustainability the same should be true, but generally it does not happen. There are lots of schemes you can join to explain in broad strategic terms how your business is tackling sustainability; the Dow Jones Sustainability Index, FTSE4Good, the Business in the Community CR Index and the Global Reporting Initiative (GRI) are all worthy initiatives. Other schemes such as the Carbon Disclosure Project go a little further in reporting specific aspects of sustainability. But they are all like the school report, they look backwards.

My experience as chair of the Commission for a Sustainable London 2012 was enlightening. You only do an Olympic Games once, so a retrospective report was of no use at all other than for learning, there needed to be a systematic review of performance against very specific objectives by every sub-project, every contractor and every sub-contractor every month. This was a great success and the Olympic Delivery Authority (ODA) delivered unprecedented levels of sustainability performance.

However, this came at a price. There was no system available and no consistent way of collecting data. This led to a tower of Babel of people with spreadsheets, each one slightly different to the next along with an army people who had the monthly task of consolidating all this data to try to answer the questions “will we meet our objectives?”, “if not, why not?” and “what do we need to do about it?”.

Since London 2012, I have been working with colleagues at Action Sustainability to find a solution to this problem. I am pleased to say we have made some significant progress. Our Supply Chain Tool has been in use with two very patient clients for nearly two years now and I am pleased to say we have ironed out the bugs and created something that could contribute to consistent performance management and meaningful benchmarking in the future. We will only succeed in this area if we manage performance in the same way as we manage everything else, with good data and information.

Shaun McCarthy is director of Action Sustainability

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