With the ringing in of a New Year, many leaders enter January with a refreshed sense of urgency and renewed outlook on performance expectations for the upcoming 12 months. This opportunity to get started with a clean slate fuel s their optimism and gets their fist-pumping, motivational juices flowing.
Same Old Challenges
Unfortunately, for many leaders today this boost of energy fizzles out by mid-afternoon of their first day back. Their grand ideas and big plans are met with the same old challenges they faced before; obviously, something needs to change. Understanding this, many leaders attempt to tackle the New Year /old challenges conundrum with a shiny, new, hot-off-the-presses scorecard.
First, they sift through the ashes of last year’s performance targets so they have a starting point for this year. Next, they look at last year’s actuals vs. goals to see how far off target they were. Finally, they search for any identifiable trends and attempt to pinpoint where it all went wrong. Armed with this information, they build a new scorecard for the new year; the idea being that a new scorecard will bring better results this time around.
A New Scorecard Will Fix Everything, Right?
So, this year all you need is a new scorecard and things will be different – right? Well, not exactly. Leading organizations understand that ripping and replacing a scorecard year after year doesn’t yield the desired results. So what do you do? Rather than going with a complete do-over, simply leverage what you have and make some modifications. As senior leadership makes adjustments to the organization’s overall strategy you can make tactical, team-level adjustments to stay in alignment. You can probably stick with at least half of your previous metrics. You can then add a couple metrics, redefine a couple others, and even take a couple metrics off the scorecard and… presto-chango, you have a “new” scorecard.
When revamping your scorecard, keep in mind that a) it will never be “perfect,” and b) a scorecard should and will change over time.
Common Business Scorecard Mistakes
1 – Tracking Too Many Things – simply because you can measure something does not necessarily mean that you should. Metrics need to be within your span of control, fall within mission-oriented focus areas, and have meaning and impact on activities. The most effective scorecards typically have between 15 and 18 total metrics. A rule of thumb to follow – if it takes you longer to compile the information than it does to review it, then you are probably tracking too may things.
2 – Random, Infrequent Review – to get the most out of your scorecard you need a systemic approach to its use and review. You should have established communication guidelines and a standard frequency for review to allow all teams at all levels to maintain a common “battle rhythm of communication.”
3 – Failing to Audit and Adjust – great organizations review their metrics every 90 days. This audit process gives each team an opportunity to maintain scorecard relevance. Everyone will have a common ground by which to make adjustments to metrics, targets and focus areas. Cross functional teams will also spread best practices and drive Continuous Improvement as the audits cascade down the org chart.
Even the most efficient organizations find that it takes, on average, 6 audits (with subsequent adjustments) to achieve highly effective, meaningful scorecards. This means that as part of your overall scorecard strategy, continuous tweaking and best practice sharing have to be part of the mix. So, if you started with a totally new scorecard system today, you wouldn’t expect it to be “right” until approximately Q3 of 2013.
The recommended approach to creating a “new” scorecard would be to use what you have, make proper adjustments, and implement supporting audit processes to be sure that all scorecard improvements take place when needed, not only when you pin up a new calendar on your wall.
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