Which method of averaging for management reporting

**ernestgoh** · 02-22-2010, 01:52 PM

Hi all, I have a question which I have been pondering on.

Assuming the below performance report:

Day 1
Actual 1
Target 1
Achieve 1/1 = 100%

Day 2
Actual 1
Target 1
Achieve 1/1 = 100%

Day 3
Actual 9
Target 10
Achieve 9/10 = 90%

Which method do you use to report the Achievement for the 3 days?
1. Do you take the average of 100%,100%,90% to give 97%
OR
2. Do you sum Actual (Day1+Day2+Day3 = 11) / Target (Day1+Day2+Day3 =12) to give 92%

Mods/Admins - please delete this thread if you think it is not appropriately posted. Thanks.

**JBeaucaire** · 02-22-2010, 02:02 PM

Both answers are correct. Neither is better than the other.

It's up to the management team to decide whether they want:

1) An average of the daily results (97%)
2) An average of the weekly activities (92%)

Based on the way you phrased the question at the end, I'd think you would choose #2.

**StephenR** · 02-22-2010, 02:02 PM

You use the second method, which weights your average. Edit: well, ok JB is right, the first is not incorrect, but in my view the second is better.

**ernestgoh** · 02-22-2010, 02:11 PM

True both methods are correct. However, I am actually more for method 2 as it looks at the business as a whole. I feel method 1 could be mis-leading (this is also our current practice now).

**JBeaucaire** · 02-22-2010, 02:27 PM

It's only misleading if it hasn't been examined what the values being used currently actually mean. You're doing that now, so I imagine it will be reconciled with what your business wants to emphasize.

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