InetSoft Webinar:Scorecards Are Not Only For Senior Management

This is the continuation of the transcript of a Webinar hosted by InetSoft in February 2018 on the topic of "Business Intelligence Agility" The speaker is Mark Flaherty, CMO at InetSoft.

The number seven stupid measurement mistake is a lot of companies have scorecards only for senior management, and they present these to the lower level employees, but you find their eyes glaze over, and they are just not that interested because they really can’t see how anything they do on a daily basis makes any difference in the overall measures because there are four or five levels above them. So scorecards need to be developed for all levels of employees, not just for senior management.

That doesn’t mean not communicating the senior management scorecards to employees. It means they have their own metrics that tell them how they are doing at their jobs. In fact, many companies have found that performance and employee morale went up after giving people daily and weekly feedback on their performance using scorecards.

Number eight, I used to say that your scorecard should tell you what’s going on in your organization, and what I’ve learned over the years is that your scorecard might be a lot better if you included a couple of external metrics. What’s going on in the world might have a big impact on your decision making in your organization.

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For an example, a metal products company might have the price of steel on their dashboard. It’s something they track on a daily basis. They can’t control it but it makes a big impact on their profitability and so forth.

Number nine, of all the sections on the scorecard, the people section is usually the worst. Most of these metrics are pretty useless. They don’t really tell you anything about what’s going on. I see things like employee turnover, and what it doesn’t consider is that sometimes when you lose somebody that’s a good thing. Or I see things like how many butts are in, or how many chairs are in training programs. It doesn’t measure whether people learned anything, and usually it doesn’t even measure their attendance because they hand out the roster sheet in the morning, and then people leave and go back to work.

So, number ten, measures drive the wrong behavior. People do what they are being measured on. Let me tell you about the best scorecards I’ve seen out there. Most of the measures are indices or analytic measures versus singular measures or just numbers that you could count. Like dollars in sales is a singular measure. The ratio of sales divided by expenses would be a formula measure. An index is a different type of measure where you take different units of measurement and combine them into one number.

The best scorecards have an equal number of measures for different aspects of performance. I still see a lot of scorecards that have 20 or 30 financial measures and one or two customer and employee measures, so it is not exactly balanced. Their scorecard is the foundation of their strategic plan, and it links both to their mission, what they are doing for a living, their reason for existence, and it links to their vision, what they are trying to achieve for the future.

Good companies are actually using scorecard software that they’ve purchased. I know of many companies that have purchased very expensive scorecard software, and they still use Excel spreadsheets and PowerPoints to display performance because that’s what people are comfortable with. They define links between their leading and lagging measures and their softer ones and their harder ones, like employee satisfaction and productivity and things like that. They’ve got scorecards cascaded all the way down to all levels of employees, and there is a good mix of past, present and future measures.

Most scorecards still are tracking things that have already happened, the past. A future measure is not a forecast of a past measure. A future measure is something like cholesterol, something real you can measure, and it predicts heart disease, which is something you care about. So you have to figure out what your cholesterol measures are for your organization and put some of those on your scorecard.

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