Operating KPI Cadence

When to use

Use this skill in the first weeks of ownership, when the reporting rhythm is set, and whenever the monthly pack has grown to forty pages nobody reads. Reach for it after a covenant scare, when the board finds it was watching the wrong measures a month too late.

What it does

Produces the operating review as an installed process: a fixed calendar, eight to twelve measures each with a written definition, the reference against which each is read, escalation rules agreed before any variance appears, and an agenda that runs to decisions.

Method

1. Fix the calendar first. Close by working day eight, pack out working day ten, review on working day twelve, actions within two days, published a year ahead. The dates should be boring and immovable; the 100-day plan's reporting rebuild exists to make them achievable.
2. Choose eight to twelve measures, no more. Four families: trading in the month, the unit economics behind it, cash and balance sheet, and covenant. Each earns its place by tracking a named lever in the EBITDA bridge or a covenant test; one mapping to neither is interesting, not operational.
3. Write the definition contract. For each measure: numerator, denominator, source system, cut-off, owner, restatement policy. A measure whose definition is argued in the meeting has already failed -- the argument displaces the decision it was meant to prompt.
4. Never show an actual alone. Every measure appears against budget, prior year and a trailing twelve-month trend. A single month is noise; the turn in a trend is the signal worth acting on early.
5. Set the escalation rule before the first variance. For each measure: threshold, trigger, responder, deadline. Agree it once, in calm conditions -- a rule negotiated in the month it fires is not a rule. Thresholds must catch both a single bad month and a slow drift across several.
6. Run the meeting to variance and decision. The pack is read before, not during. The agenda is variances outside tolerance, escalations triggered, decisions required, actions from last month. Anything needing a slide walkthrough belongs elsewhere.
7. Keep the operating review separate from the board. Monthly is management and the operating partner, and it is operational; quarterly is the board, and it is strategy, plan and capital. Merged, strategy becomes a read-through of the accounts.
8. Re-cut the measure set annually. Retire any measure that has not triggered a decision in twelve months; add the ones the year's surprises would have caught. Dashboards grow by default; only pruning keeps them readable.

Inputs

• The EBITDA bridge and value-creation workstream KPIs
• Covenant definitions, test dates and levels from the credit agreement
• Chart of accounts and the source system behind each measure
• The management accounts timetable and current close performance
• The board calendar and existing pack

Output format

• The published calendar: close, pack, review and action dates for a year
• Eight to twelve measures, each with its definition contract in prose
• The reference set for each: budget, prior year, trailing twelve months
• Escalation rules: threshold, trigger, responder, deadline
• The standing agenda, and its separation from the quarterly board
• Present the measure set and all schedules in prose, never as markdown tables

Example

Marlow Testing Group (fictional, illustrative): net debt at close is 100 on LTM EBITDA of 25, so net leverage is 4.0x against a 5.0x covenant. EBITDA can fall to 20 before breach, a cushion of 5, or 20% -- so the escalation rule is written in EBITDA, not the ratio: if LTM EBITDA falls below 23.5, leaving under 15% cushion, the CFO produces a thirteen-week cash forecast and covenant reforecast within ten working days, and the chair is told that day. Order intake carries its definition contract: the signed value of orders with a purchase order number received in the month, excluding framework renewals, from the order book at the last calendar day, owned by the commercial director, restated only for cancellations inside thirty days. A dull sentence that ends the monthly argument about whether a verbal commitment counts.