4 Reasons to Audit Your Scorecard
Your financial measures are audited regularly to ensure that they are accurate and meet professional standards; there are even better reasons to audit the rest of your performance scorecard. Perhaps you have strong performance measures in your organization and use a Balanced Scorecard, or something similar, to review and manage performance. And like every other organization, you know very well the value of auditing your financial documents and measures of financial performance. But what about auditing the rest of your scorecard—the validity, usefulness, strengths and weaknesses of the measures that drive financial results? Should you be thinking about such an audit? What are the benefits? What Is a Scorecard Audit?
Like any true audit, a scorecard audit will compare your practices against key criteria: professional standards, best practices, and their suitability or usefulness to your enterprise. An audit provides an independent, impartial assessment of how you track the performance of your enterprise and the quality and suitability of the data you use for this tracking.
Once optimized, your scorecard provides an accurate tracking of enterprise performance, stimulates action on emerging issues, and supplies a rich backdrop of relevant information against which to make strategic decisions. It functions as a key management tool and should be a significant part of the foundation from which you lead the enterprise. An independent professional audit is the best way to assess the success of the system and better realize these goals. Perhaps you believe it’s self evident that performance measures should be carefully audited. Many people would generally agree. But let’s be more specific about the reasons:
1) Audits validate system design
ensuring that you have the right measures and right scorecard design to address the two fundamental issues in enterprise performance: strategy execution and operational efficiency.
2) Audits improve user satisfaction
by checking the quality of information available to managers and the means by which these data are incorporated into the process of managing the organization.
3) Audits improve data quality
through careful examination of the performance data, the analyses performed on the data, and the comparatives presented. Leaders are assured that the right topics are measured and that reliable numbers are being presented.
4) Audits drive change
because an outside assessment and analysis can more readily galvanize action and bring focus to your improvement opportunities As they use performance measures over a period of time, two things happen for business unit and workgroup leaders at all levels. First, their requirements change as new circumstances arise and, second, leaders learn more about the measures they need and what drives the right actions. An outside examiner is uniquely positioned to gather relevant data on this experience, sift the significant issues and lessons learned, and promote the changes that better serve your organization.