Scorecards are a key component of a performance management initiative, yet many companies are not satisfied with the results they’re receiving from their scorecarding programs. Why? Partly because they may focus too much on the mechanics of getting their scorecards implemented and neglect to address the effectiveness of the scorecards once they’ve been created. Based on Silvon’s own work with firms who needed help in this area, we found some common factors that led to the biggest scorecarding headaches.
Here are 3 areas in which performance scorecards tend to fall short of their intended goals:
When it comes to scorecard metrics, we all too often measure what’s easy to measure rather than what’s important to the business. How does this happen? People come up with a wish list of metrics and KPIs that they’d like to evaluate, but end up deploying different and less meaningful metrics because the data for those metrics are not readily available. When getting a scorecarding program off the ground, it’s far better to focus more on metric consensus and worry less about metric data. Getting key stakeholders to agree on what should be measured, who’s responsible for the KPI, and what the action items will be as a result of scorecard measures is key!
Trying to track too many KPIs is a common roadblock to a successful scorecarding strategy, as well. Remember the old saying, “Quality is better than quantity.” And metrics should support (or align with) a company’s business goals. If they’re developed in a vacuum and don’t take management’s goals and objectives into consideration, they’ll have a lower chance of success and of support from the C-suite.
It’s not uncommon, too, for companies to set sail using another organization’s metrics, which may not be adequately relevant or meaningful to their own businesses. While it’s helpful to learn what other firms are measuring on their scorecards, keep in mind that their metrics may not fit your business or you may not be able to gather the same data they do. Poor fit will eventually lead to poor results.
One final pitfall in the metrics area relates to “actionability.” If scorecard metrics aren’t actionable or don’t help to pinpoint the root causes of problems, it will be difficult for your company (and the companies you’re measuring!) to be accountable and take corrective actions. While this sounds simple enough, we’ve been surprised to see how many scorecards some companies deploy that don’t allow for more detailed analysis of the underlying data!
Lack of Collaboration & Corrective Action
If scorecard results are not regularly shared with the companies you’re measuring, there will be no resulting performance improvement. Or if the companies you’re measuring are unclear about your expectations, the point of having scorecards in the first place become somewhat mute. Simply stated, collaboration is a must!
Also important are follow up actions that result from the scorecards (i.e. recognition, rewards, corrective actions, or disengagement). If there are no consequences or rewards resulting from our scorecards, our internal stakeholders and external “partners” will eventually ignore them.
As eluded to earlier, consensus among stakeholders is critical to the success of a scorecarding program. This generally occurs during the scorecard design and metric definition phase and helps to ensure credibility and transparency from the start. Otherwise, doubt and disputes can arise within your business and with your customers, suppliers and other partners whose performance is evaluated by you.
Internal stakeholders also need to provide input on a timely basis. If internal support and discipline is lacking, the best laid plans for measuring internal stakeholder satisfaction can disappear, derailing your performance evaluation process. Everything needs to be transparent.
Now that I’ve set the stage for common obstacles to expect when kicking off a scorecarding initiative, keep on the lookout for a future post that addresses some ways to overcome them!
This post was written by Pat Hennel