Performance reports

The content and overall design of performance reports is regularly examined in the Advanced Performance Management (APM) exam. This article aims to provide guidance on how to tackle this type of question.

Examples of some recent exam questions are listed below (extracts from the exhibits to assist with context are in brackets after the main requirement):

  • September/December 2019 Q1 (i): the performance reporting at Arkaig (In preparation for the next board meeting, the CEO needs an evaluation of the current report.) (11 marks)

  • March 2020 Q1 (i): Current performance reporting (Therefore, the CEO wants a full evaluation of the current performance report) (15 marks)

  • March/June 2021 Q1 (ii): Whether the report addresses the company’s objectives and the reports presentation (assessing whether the current report addresses the company’s objectives and briefly, any other issues in its presentation. (14 marks)

Of course, performance means different things to different organisations, there is certainly no single correct way of measuring or presenting performance. For example, profit-seeking organisations will certainly be interested in sales and profits, but charitable organisations have neither sales nor profit. Furthermore, even within a single organisation different aspects of performance may have to be examined in more detail at different times and for different audiences.

Mission and objectives

An organisation’s mission and subsidiary aims/objectives should define its purpose, and any evaluation of a performance report must address the extent to which these are being measured and allow the organisation’s executive to see if its mission etc. is being achieved.

March 2020 Q1 (Achilty) contained the following:

Achilty’s mission is ‘to deliver long-term returns to shareholders through a combination of sustainable growth in earnings per share and payment of cash dividends’. This mission will be achieved by the following subsidiary objectives:

– Improving product ranges;
– Increasing the number of customers and their individual spend;
– Focusing on customer service; and
–  Improving profitability by efficient cost control in purchasing and inventory management.

Using the above exam question as an example, the first matter to consider is whether the performance report addresses the mission. It is useful here to determine if the mission has multiple parts, which is the case with Achilty. Its mission has two parts – sustainable growth in EPS and linked to that cash dividends, it is essential that each of the component parts is considered in turn, in terms of whether the performance report adequately measures each one.

Once the mission has been addressed, then each of the subsidiary aims need to be assessed. Once more the focus should be on whether the report measures each of these key areas effectively.

If the performance report does not address the mission and subsidiary aims effectively then this should be called out and a justified explanation provided as to what the organisation should do instead. The justification is key here as for example saying that ‘the fourth subsidiary aim is only being measured through gross profit margin and there is nothing on inventory’ would score one mark but if the answer said ‘the fourth subsidiary aim is only being measured though gross profit margin and there is nothing on inventory which would be useful as it could measure how much obsolescence and inventory write offs were costing Achilty’, this would score two marks.

General considerations and layout

The audience for performance reports will normally be the board of directors, managers, owners, government or, more generally, those charged with governance.

Care has to be taken to assess the appropriate level of detail, layout and terminology used in reports so that users will properly understand the information that is provided. It should be considered whether the report has too much or too little information. One of the most common criticisms of reports is that they present too much information and are much too cluttered. There might be valuable information there, but it is almost impossible to find and interpret it. There is always the suspicion that large volumes of information have been deliberately provided to obfuscate the facts and to blunt the message.

In addition, the level of the information being reported should be considered – ie lots of operational details should not be necessary in a report which is for the board and ought to focus on strategic performance indicators.

Layout must help users to understand the information presented and to quickly see the important amounts, trends, results, and explanations. Graphical displays can be used to greatly enhance performance information.

The inclusion of a narrative commentary explaining the information is also usually needed for drawing attention to important matters and explaining their significance or causes. For example, even something as simple as an adverse material price variance needs an explanation about what caused it. If no explanation is given it will simply mean that questions will be raised later. Explanations might be accepted or might be challenged, but simply to report a variance without stating how it might have arisen is not going to help the report’s recipient at all.

As well as the evaluation of whether the report measures the mission and objectives, consideration should be given to whether any other important information is missing, for example, external benchmarks like competitor information, previous years for trend analysis and/or budget information. Again, though, if you are recommending the inclusion of this information, you must justify why it would be useful to the organisation in the question. It is insufficient to say ‘include more external information like competitor information’ without saying why. The why is absolutely vital for scoring marks.

Types of information

Information can be classified as follows:


Examples are:

  • Financial: sales, profits, costs, GP%, return on capital employed.
  • Non-financial quantitative: percentage of product rejects, volume of sales, number of complaints.
  • Non-financial qualitative: reputation, effectiveness, customer satisfaction, staff morale, innovation.

The information provided must match the purpose of the performance report. In particular, non-financial performance is a very important determinant of the long-term success of any enterprise. For a business, short-term financial performance can often be improved by reducing quality, innovation, and training. However, a business pursuing these approaches is likely to suffer financially in the long term. It is not so much that a business is interested in making high quality products for their own sake, but if the business positions itself as a high-quality manufacturer, it must deliver high quality and, therefore, quality needs to be monitored. If the business were known as a ‘cheap and cheerful’ supplier, the measurement of quality would be much less important but costs per unit would become more important.

The need for non-financial information is more obvious in not-for profit organisations and, indeed, in those organisations non-financial performance is often an end in itself, rather than an enabler of profitability.

Non-financial qualitative information is likely to be as important as quantitative information but is harder to measure and present in reports. Technically, qualitative information is known as a ‘construct’, an attribute that cannot be measured directly. Examples of constructs are enthusiasm and empathy. Both are very important in business, but there is no direct way in which they can be measured. Usually, for communication, assessment, and comparative purposes an effort has to be made to try to turn qualitative information into quantified information. For example, in a hospital it would be important for patients to feel that they were treated sensitively and with dignity. Assuming management feels that these are important qualities, targets need to be set for them and performance assessed. Inevitably this will be done by setting up some type of numerical assessment system so that qualitative information becomes quantitative.

The transition from qualitative to quantitative can introduce distortions to the information. For example, does what is measured truly reflect what the undertaking organisation wants to assess? For example, in an effort to measure enthusiasm an organisation might measure when staff arrive in the morning. However, the person who always arrives early might simply be a victim of an hourly train service: arrive 40 minutes early or 20 minutes late.


When evaluating a performance report remember to:

  • Assess whether it measures the components of the organisation’s mission
  • Assess whether it measures the subsidiary aims and objectives of the organisation
  • Review its general content, level of detail and layout

This approach is key as it identifies the priority order to address the requirement and will help to keep your ideas in a structured order.

Also remember that as part of the evaluation do not be afraid to recommend changes or alternatives (unless told otherwise) but ensure these recommendations are justified as to why they should be considered.

Written by members of the APM examining team