What is a Business Scorecard?
A scorecard is a management tool used to measure overall performance and aid leaders with strategic planning. With defined focus areas and specific performance metrics, leaders are more easily able to know how well the business is running. For clarity and efficiency, the individual metric results can be color coded, so that anyone can answer the question “are we winning or are we losing?” within five seconds.
What steps are necessary to build effective scorecards?
To establish a common format, each scorecard in the organization needs to connect directly with the overall mission through predetermined focus areas. These focus areas help establish a common business language and connection with all other work groups.
With each focus area having between one and three performance metrics, work groups are able to directly contribute to the achievement of the organization’s mission. Metrics scores are able to roll up and contribute to top level metric scores.
With failing metric performance displayed as “red” and satisfactory performance displayed as “green”, employees can quickly identify how they are performing against their goals. This allows employees to focus efforts in the right areas and develop corrective actions.
By assigning employees with the task of updating metrics, you’ll foster an environment of ownership in the business and create a more engaged culture. With an established frequency for reviewing performance, work groups can be sure their efforts are focused and timely.
How can you develop effective and meaningful scorecards?
Scorecards have long been used to measure business performance, but they have not been utilized effectively as part of a tool that also measures the behaviors that drive that success. From developing strategic scorecards and linking them down to the tactical level to driving accountability and consistency, creating a successful strategy for long-term sustainability is a key objective during the deployment of a business performance software tool. A key component of this process is creating scorecards that have the right metric at the right level. CSI has extensive experience developing meaningful metrics at each level of an organization.