The Power of Organizational Scorecards

There is a growing buzz in education around the use of scorecards.  What are they really all about? Are they over-hyped?  What additional value do scorecards bring?  Where do we start?  These are all valid questions out there.

High performing organizations have used business scorecards to drive continuous improvement and culture change, which can seem almost like magic.  The goal in this article is to address the above questions and make it simple.

What is a scorecard?

Scorecards typically have four main components: 

1) Measures 

2) Linkages to strategies/objectives 

3) Historical and current performance levels

4) Accountability

Measures are everywhere around us.  They are commonly used to inform regarding past, current, and predicted performance.  Think of a Fitbit watch which has measures regarding our current state of health.  Measures help track progress and pinpoint areas for improvement.  The old saying still holds true: “What gets measured, gets done!”  Selecting good measures, both leading and lagging, takes practice.  See the articles on Performance Management for more on measures.

Scorecards provide alignment.  A good scorecard has gone through a process of ensuring rigor in the selection and alignment of each measure with the organization’s goals.  It’s really not a complex task but many organizations make it unnecessarily so.  Doing a good job in this phase of scorecard making can identify areas of inefficiency. 

Historic and current performance allow you to set predicted performance measures.   Benchmarks can be set simply based on historic performance by raising the goal an incremental amount, i.e. 20%, or they can be based on analytically predicted gains as a result of targeted improvement initiatives.  This will allow you to create the benchmarks with which to develop and assess performance improvement efforts.  

How will scorecards impact my team/organization?

Scorecards can form the foundation of a continuous improvement culture.  That seems like a strong statement, but hundreds of organizations have proven it accurate.  Scorecards will improve performance and drive progress because employees will:

1) learn from where they have been 

2) implement analysis-based improvements 

3) iteratively make progress toward goals 

This will lead to a “continuous improvement mindset” in the organization.  This happens when employees begin to look at their past/current performance measures and start to collaborate, problem-solve, and innovate to meet future goals.

Where do I begin with implementation?

There are four elements to implement in the use of scorecards: 

1) Visibility 

2) Cadence 

3) Coaching

4) Recognition.

Making your Scorecard visible not only for the employee “assigned” responsibility for the measure but also for others in the organization to view and comment on is important to foster a culture of accountability and support.  Displaying scorecards outside responsible employees’ offices and in areas around the workgroup can help foster ownership, accountability, and pride.  Electronically available scorecards are also an effective tool.

The cadence of both formal and informal reviews of scorecards is essential to successful implementation.  Scorecards should become an essential and routine part of the organization’s governance and performance management structures.  This means there should be a regular, recurring meeting at different levels to review performance and discuss progress or obstacles.

Coaching is critical when rolling out scorecards and the accountability for performance that goes with them. It is a form of support that is needed for employees to engage and fully drive the needed improvements. The feeling of being supported by their organization is a too-often overlooked ingredient of success.

To create a culture of continuous improvement, it is essential to recognize those who have driven improvement and carried the accountability for the performance of an organization's key metrics measures and celebrate their achievements. This is always done best when it is organic to your team/organization's culture.