Scorecard Dimensions to Make KPIs Communicate

Selecting measurables (KPIs) for your business is pretty easy to do, but pretty hard to do well.  If you have a company scorecard that usually says “yeah, but…” when a number misses the mark – or if you have none at all – then here are some ways to think about how your numbers relate to each other.  Following them will help you create scorecards (yes, plural) that present a healthy look at your organization and naturally point to solutions when they’re off.

Business Function Dimension

There are three principal “verticals” in any business, and the numbers that you select for your leadership scorecard should reflect all of them:

  1. Sales and Marketing (“Get business”)
  2. Client Operations (“Service/Keep business”)
  3. Finance (“Fund the business”)

At a leadership level, these all need to be measured because they impact each other and the decisions that you make.  The moment that Client Operations declares that a new hire will solve their red number, you’ll be glad to have the Finance number showing you that you can’t afford it.  You’ll come up with a different solution and prevent yourself from creating a bigger, existential issue.

Time Interval Dimension

Scorecards should be either weekly or monthly.  There are different numbers for each. Monthly numbers should be the items that are “one step” away from the financial outcome.  Weekly numbers, however, should drive actions today that accomplish the monthly numbers.  Typically, there will be more numbers on a weekly card than on a monthly card.

Organizational Depth Dimension

Remember those three fundamental verticals of the business?  Those are departments in your organization (even if one person is responsible for two of them!).  Each department needs its own KPIs and they should start with the leadership KPIs assigned to them. So, if your leadership scorecard calls for average price as a sales KPI, then it is assigning ownership of that item to sales (and to your head of sales).  The sales and marketing scorecard, then, should start with the question, “How do we deliver a healthy average price?”  They’ll likely start with the same number on their card but add more numbers around that number to add color to the picture based on what might influence an average price.

At monthly level, they may add close rates for leads (where a high close rate may mean that a higher price should be charged, for example).  At a weekly level, they may look at the mix of deals that are being done.  It would be up to the team to decide.

Pulling It All Together

Making this all work can be a balancing act.  How does your leadership team scorecard look today?  Are there items that have been red on your weekly for a long time, and every time you look at it, you say, “yeah, but…”?  Maybe it’s time to take a fresh look at which measurables truly make sense.  Running them across these dimensions – not to mention picking Simple, Accessible, and Relevant numbers – will help get that scorecard working for you.

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