Are you looking for a way to stay on track and achieve your business goals? Many business owners set lofty goals at the beginning of the year, then they get busy, don’t track performance, and as a result they do not achieve their goals.
Many businesses track their financial results, but they often get the information when it’s too late to make better decisions that could improve their performance.
Business owners and managers can use a Business Scorecard to keep track of their performance on a more frequent basis and use the information to make better business decisions. Creating a scorecard and reviewing the information each week can have a dramatic impact on business results, including identifying whether you are on track to achieve your goals as well as identify problems and correct them before you get too far off track.
What are the benefits of using a Business Scorecard?
Creating a business scorecard is a great first step toward achieving your goals. A business scorecard has many benefits, including….
- Monitor performance in near real-time
- Identify potential problems and solve them
- Drive accountability throughout the organization
- Focus on the activities that drive outcomes
- Create clarity and accountability for team members
- Prioritize “the most important thing” to focus on
How to select measurable’s for your Business Scorecard
A great business scorecard should track the activities that produce the results you are looking to achieve, not just the outcome.
What’s the difference between an activity and an outcome?
An outcome is your goal. Examples of outcomes include increasing net profit, or selling $1M in new business.
An activity is something you can do that will get you on a path to achieving that outcome. Examples of activities might include adding new deals to your pipeline, or tracking the number of jobs that are completed that were lower than your profit target.
Here are a few examples of activities and outcomes.
|Increase net profit||# of jobs completed < profit target|
|Sell $1M in new business||Total $ added to pipeline|
|Hire 10 people||Conduct 30 interviews|
|Increase team engagement||# 1-on-1s completed by managers|
|Double traffic to website||Publish 5 new content pieces/wk|
The key to selecting your scorecard measurable’s is to find the right activities that you can track that will help you determine if you are on track to achieve your goals.
Let’s use the goal of hiring 10 people to break this process down. If you want to hire 10 people this quarter, and there are 13 weeks in a quarter then you essentially have to hire 1 person per week (with a few weeks of no hires). In order to hire 10 people, how many interviews do you typically need to conduct? If you’re like most businesses you probably need to conduct a lot more than 10 interviews to find 10 people.
Perhaps you make offers to about 30% of the candidates you interview, so then we need to conduct about 30 interviews. However, do all candidates show up to their interview? Unfortunately, interview ghosting is a real thing and often times candidates do not show up, so you might need to schedule 35+ interviews to get 30 conducted.
How many applicants do you typically need to look at in order to schedule 35 interviews? In all likelihood you will need a lot more applicants, so lets say 70 applicants are needed.
Now the big question – how do you know if you’re on track to hire 10 people? Well if you need 70 applicants in order to get 35 interviews in order to hire 10 people, yet you only have 10 applicants then you are off track to achieving your goal. What can you do to increase applicants? That’s a topic for another day – but this shows you the power of using good activity based metrics to identify potential issues and solve them before it’s too late.
Business Scorecard Template
To help you get started, we have a handy business scorecard template that you can use to get started.
- Less is more – strive for < 13 metrics that you are tracking on your business scorecard
- Each metric needs a clearly defined owner
- It is helpful to color code your items that are below your target to visualize your performance
- It is important to look for trends. If you are off one week that may be ok, but if you are consistently missing the target that speaks to another problem. It could mean you have the wrong target, might have the wrong person, or some other issue that needs to be solved
Creating a business scorecard can be a daunting task, which is why we offer a Scorecard Workshop for businesses who need a little help.
In our half day scorecard workshops we will do a hands-on session with your leadership team to identify the right activity measures for your business, and can even help you hold yourself and your team accountable with our ongoing Fractional COO Services.