What I Saw at the International Conference in Orlando - Part 5 - How Do I Know When I Done Good?

 

Today, Paul Druckman, in his presentation "Integrated Reporting Framework: What Does it Mean for the Future", started with the phrase "Reporting Influences Behavior." This set my mind down such a road that I had trouble focusing on the primary point of the presentation – integrated reporting. This distraction was caused by my desire to run up and down the aisles screaming "Hallelujah!" and "Amen Brothers!" while leading the congregation in a chorus of "How Mighty Are Our KPIs."
 
Think very hard about that concept – reporting influences behavior. How many times have you seen people's behavior – within departments, within auditing, within organizations – being driven by the measures of success? And how often has that actually lead to success?  Which leads to an important corollary: "You get what you measure"
 
Finding the right/correct measures cannot be overstated. Anyone can hit a number. If that number is unimportant – if you haven't found the things that actually represent success – then you will have a valueless victory.
 
Quite a few years ago we put together a balanced scorecard for individual audit departments. At the end of the first year, one department hit approximately 95 points out of 100. No cheating, no incorrect reporting, no fudging the numbers. They were at 95%. I am here to tell you they were far from our best department. Yet, they had "succeeded."
 
And that leads to corollary number 2: "Just because you can measure it does not mean it is important."   And there is the trap so many departments, so many balanced scorecards, so many developers of KPIs and measures of success fall into. Every measure is used. And every measure is important. And the focus is on developing the measures that are the easiest to pull together. 
 
From talking to people at this year's conference I am recognizing that one of the hot topics seems to be internal audit's measures of success. There has always been the recognition that reporting influences behavior (that is why we set up KPIS). And more and more there is the growing recognition that you get what you measure and just because you can measure it does not mean it is important.
 
Now, the voices of the few delegates I happened to speak with do not represent a mandate.   But I believe it is an indication that a groundswell of interest is growing.
 
This is one of those posts where I have no solutions; I only bring up the problem. But that is why we all need to explore, we all need to discuss, we all need to innovate. We have reached a point where we have a better idea of the behavior we want to influence, we just haven't figured out the measures that will cause that influence.
 
(And if you want to know more about integrated reporting, then check with the IIA for the latest publications on the subject.)

Posted on Jul 16, 2013 by Mike Jacka

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