Are you convinced that a scorecard is necessary for your company, but don’t know where to start?

Scorecards first entered the business lexicon in 1992 when two articles by Robert Kaplan and David Norton, “The Balanced Scorecard – Measures that Drive Performance” and “Putting the Balanced Scorecard to Work,” were published in the Harvard Business Review. We combined the ideas in these articles with those in the book Traction: Get a Grip on Your Business by Gino Wickman to come up with our own version of a scorecard. It has been an invaluable tool for us to monitor our progress toward achieving our strategic goals as a company.

A scorecard is a set of measurements that companies track and review on a regular basis, thereby giving them an early indication of their future performance. A good scorecard relies on leading indicators, which are metrics that can be influenced before a larger trend has been established. For example, leading indicators of consumer interest might include website traffic and new lead generation. If the focus of a scorecard is on lagging indicators, such as revenue and sales, proactive insights cannot be gained and acted upon in a timely manner. Lagging indicators are metrics that can’t be influenced once the numbers are realized.

Here are five tips to help your company establish a scorecard.

1. Set aside an entire day to hold a focus session with your leadership team. Aim to come up with the leading indicators, referred to as measurables, for your company. Establish goals to tie your measurables to your annual operating plan. Every person in the company, not just every department, should have at least one measurable that aligns with their role in the company. For example, someone in marketing could be assigned the number of inbound leads generated, or a someone in the accounting department could be given accounts receivable past 30 days.
2. Use CRM or MA software to track and automate reporting on measurables and use reporting tools like IT Sapiens to make it even easier to compile these numbers. Reports on measurables should be automatically generated weekly and sent to each person who is accountable for that measurable. Each person should review his or her measurable(s) and forward them to a central person who compiles this information in a chart that becomes the scorecard. This central person can vary, but as COO of BrainSell, I find that it is a valuable exercise for me to compile the scorecard because I can review each measurable in detail. I can then follow-up with clarifications or questions about the measurables before the scorecard is reviewed by the leadership team.
3. Pilot your measurables and associated goals for a quarter. Live with them, see how they’re reported, and improve upon them. We have been using our scorecard for seven months and still modify our measurables every so often.
4. Track your measurables for a rolling 13-week period, and by past and current quarters, to-date and year-to-date. Set aside time at your weekly leadership team meeting to review your scorecard and capture action items for follow-up.
5. Hold each person accountable for their measurables, but measurables should not be used as an employee’s personnel performance evaluation. For example, if lead generation numbers have decreased, don’t simply assume this trend is tied to the performance of a business development rep. Instead, initiate a discussion with that person to better understand what needs to change to reverse the trend. Some possible changes might include updating tools, a change in process, or creating content to influence the buying behavior of potential customers. If this conversation occurs early enough, the resulting changes can lessen the impact on future sales and revenue.

Each person in your company is accountable to every other person through the implementation of a scorecard. Compiling and reviewing a weekly scorecard of key metrics allows each person to be much more productive, eliminate surprises, be more deliberate about decisions, and self-manage potential issues.

Have you implemented a scorecard at your company? If so, I’d love to hear your experience. Share in the comments section, below.