Investment operations is often measured by “no news is good news”. But even though investment operations isn’t benchmarked against a public index or the median return of its peers, measuring operational performance matters.

 

Ultimately, what gets measured, gets managed. Measurement helps you:

 

• Promote transparency and accountability to established goals;
• Foster a culture of continuous improvement; 
• Make more informed decisions about resource allocation.  

 

Below are three steps to get you started on measuring operational performance in your organization.

 

 

Step #1: Establish Your Performance Indicators

For each major operational function (reporting, investment execution, etc.), you first need to identify 2-3 key performance indicators. Do it by answering the following questions: 

 

• What metric would help show the quality of this function over X period?
• What metric would show the quantity of work involved in this function over X period? 

 

 

Example Operational Function	Example Performance Indicators
Reporting (external)	– Number of errors identified in reporting by stakeholders. – Number of days reporting was overdue by deadline. – Number of hours to generate reporting.

 

 

Your performance indicators help you gauge where “quality” (i.e., accuracy and timeliness) is not meeting expectations or goals – and where resources are needed most.

 

Step #2: Assess Vendor Performance

You should also establish indicators to measure your vendor(s) performance against expectations in your operational environment. This will help:  

 

• Encourage a collaborative partnership with vendors by promoting regular performance reviews and feedback. 
• Guide vendor renewal discussions.

 

 

Example Vendor Function	Example Performance Indicators
Accounting	– Number of errors in transactions and valuations made by service provider. – Number of business days after month or quarter end that service provider closed the accounting records.
Cash Management	– Number of cash wires set up or disbursed past deadline by service provider. – Number of errors in cash wires setup by service provider.

 

 

Given the importance vendors play in your operational environment, establishing these performance indicators is critical to optimizing your investment operations.

 

 

Step #3: Presentation Matters

Carly Fiorina, former CEO of Hewlett-Packard Company once said, “The goal is to turn data into information and information into insight.”

 

This is the final and often most challenging step to measuring your operational performance – distilling the data you collect into actionable information. Below are general guidelines for presenting performance indicators.

 

• Visualize your data – Visualizing reporting using charts and graphs empowers viewers to quickly note data trends.

• Streamline what you show – Too many KPIs can dilute your focus and overwhelm your audience.  

• Update your data quarterly – KPIs should be updated at least quarterly so that any risks or opportunities can be assessed and actioned upon in a timely manner.

 

 

Union Park Consulting offers semi-annual operations reviews that can include determining key performance indicators and establishing an operational performance reporting process. Please don’t hesitate to reach out if you have questions about how we can help. 

 

 

As always, thank you for your continued confidence and support. 

 

 

Beth Gilje
Founder

 

 

Brian Mink
Principal