Tip of the Day

Gain a Deeper Understanding of Your Operation with the Executive Metrics Report

Every month the General Manager sits down with the organization’s financial statements to analyze the ’s operating performance and to see if he met budget.  With the recent economic recession, the enterprise has been struggling a bit and the entire management staff has been trying to stimulate spending and curtail costs.

The challenge with the summary financial statements has always been trying to figure out the exact nature and cause of declining sales, as well as out-of-line expenses.  While the financial statement shows revenues by department and category compared to budget, the General Manager never knows for sure if the lower revenues are caused by less patronage (volume of business) or less spending (average check).

Conversely, out-of-line payroll costs in each department can be the result of a number of factors, such as overstaffing, overcompensation, excessive amounts of overtime, or a combination of all three.  Given the high cost of labor in our people-intensive business, even a small anomaly can have a significant impact on the bottom line.

While the necessary information to determine the causes of unmet budgets is available with a certain amount of digging, it is far better to present the information routinely as part of the financial reporting package – hence the benefit of the Executive Metrics Report.  By regularly gathering the key underlying metrics of the operation during the normal course of the operations, this detail is provided as part of the monthly financial statement and is compared month-to-month throughout the fiscal year.

Included in the Executive Metrics Report are the major elements of the profit and loss statement, specific operational detail from each department, key departmental benchmarks, staffing metrics, labor cost and overtime by department, as well as a number of significant Administrative and General expenses and benchmarks.

The concept of the Executive Metrics Report was developed by a General Manager to provide exactly the detail he wished to monitor month-by-month.  While each GM may have his or her specific information needs, the Executive Metrics Report can be customized to meet the needs of any GM and operation.

Preparing the monthly Executive Metrics Report is simply a matter of deciding which information you want and organizing the spreadsheet to present it.  Once set up, the effort involved is but a few hours or less per month.  The knowledge gained, though, is priceless and helps all interested parties – the General Manager, department heads, and the owner’s or club board – better monitor and understand the underlying realities of their business.

Read more about the Executive Metrics Report here .