Financial Transparency Series Part 4: Scorecards & Connecting Everyone to a Number

Scorecards are an underappreciated and underutilized tool in the business toolbox. Most leaders think scorecards are primarily used to track progress and action within their teams. And to drive accountability. However, if accountability is viewed as the sole benefit of a scorecard, many of the broader benefits of scorecards will be missed.

Scorecards can bring financial transparency across an organization too. When scorecards are successfully shared and cascaded from the top (leadership team) to the front lines of the organization, then “everyone has a number”. And this creates an opportunity to illustrate and communicate how everyone’s individual metric is linked and connected to the high-level goals of the organization. It’s an opportunity to make sure everyone on the team knows why “their number” makes a difference in the bigger picture. When the team knows how they are contributing to the bigger picture, it creates more ownership and engagement. And if this becomes pervasive, it shapes culture.

It’s also an opportunity to share the progress in scorecards across the organization so the culture of progress and action are widely displayed and recognized. This also shapes culture, performance, and engagement.

What’s a Scorecard

There are lots of different reporting names, meetings, and methodologies out there. However, the purpose of scorecards are different than OKRs or Dashboards. Scorecards have a weekly cadence and are focused on activity-based measures rather than outcomes. More on that below. OKRs tend to have more of a quarterly cycle and focus on ‘key results’. Dashboards, like in your car, are real-time output reporting. And dashboards are not connected to an individual. They are broader in nature to illustrate how the company or teams are performing. So, dashboards lack that link or connectedness from the individual to the broader purpose of the company.

Scorecard Tips

1 – Cascade

Decide what leaders and teams need a scorecard so that everyone in the organization will have at least one metric on the scorecard. Count the number of scorecards within the organization. There are tools like ninety.io that make this very easy for larger teams, but Google Sheets works well, too.

2 – Connect

At the top of each scorecard, develop a connection statement that defines the purpose/objective of the team to the broader mission & strategic goals of the organization. The connection statement will help inform the key metrics on the scorecard.

3 – Activity-Based Metrics ONLY

Select only activity-based metrics. “Activity-based” means these are not outcomes. Revenue is an outcome. Proposals sent is an activity. Website views is an outcome metric, but content posted count is an activity metric. This is the HARDEST part of scorecards. Outcome metrics should be discussed at monthly or quarterly meetings, not part of the scorecard! Scorecard activity is about whether the activities are happening. The monthly meeting is about whether the activities are producing the desired results/outcomes!

Here are a few suggestions to help you think about what activity-based might be in your company:

4 – Leverage System Generated Metrics if possible

If metric owners can “pull” their metric from a system, it dramatically improves the accuracy, compliance, and timeliness of scorecard updates. This is not always possible, but challenge yourself to find the right metric that is system-generated. Or enable the system to begin tracking the right activity metric.

5 – One Owner per Metric

Let each person have their own. If three people have the same key metric, let them each have their own ‘row’ on the scorecard! Or if three people all share a metric, pick one owner for the metric and the other two support but do not own it. Be very clear.

6 – Weekly Minimum Goals

For each metric on the scorecard, there should be a weekly target. The scorecard “target” should be based on the minimum target activity for the week. For example, if 3 proposals per week is the expected activity metric, the minimum goal might be 1 or 2. It’s not about hitting the 3; it’s making sure we’re staying above 1 or 2 each week. It’s a subtle but very powerful distinction.

Additional note: the activity metric could also be a “maximum goal” in that the owner doesn’t want “more than X” in a given week (e.g. No more than 3 customer issues with a resolution time >24 hours).

7 – Three Reds Make an Issue

And finally, each week should be shaded RED or GREEN on your scorecard. RED if weekly goal not achieved. If three reds in a row, then this is an issue that needs to be discussed and solved. Don’t let three reds persist on the team!