Over the course of my corporate career, I have been exposed to several different company scorecards.  Each of these scorecards were designed to help in developing a common guidance that is crucial for aligning the strategy of the company.  It helps articulate the overall measurement of the day-to-day operations; it creates a consistent format to help in improving communication throughout the organization; and lastly, helps facilitate driving better decision-making.

One aspect that I like about a company scorecard, is that it provides high-level performance evaluation of the organization that goes beyond just financials.  It can isolate opportunity areas and help to identify areas for improvement down to the division-level.  It also enhances accountability of its team leaders and ensures the organization is consistently working toward its strategic goals.

Most scorecards are completed on an annual or semi-annual basis and are focused on the largest, material initiatives of the company.  They are often linked to the compensatory bonuses for the organization and therefore, have significant impact on the overall psyche of the company.  Aligning your team to deliver on the targets identified on the company scorecard, not only accomplishes the overall company goals, but can spread the wealth to the employees that deliver those results.

Here are a few items to consider when launching a company scorecard:

Define the Purpose and Scope:  It all starts with communication.  The executive team should communicate to the organization the reasoning behind the launch of a company scorecard.  It should clarify why the scorecard is needed outlining that it will assist in creating alignment; establish stronger accountability; and provide a mechanism for measurement.  A preset communication timetable should be set to allow the executive team to communicate the results of the previous scorecard and the targets of the upcoming one.  The more that the entire team is aligned and focused on the tasks at hand, they greater chance the organization will be at accomplishing those goals.

Establish Strategic Pillars / Key Focus Areas:  Most organizations use large buckets to capture 4-to-5 areas of the business to focus.  At Clark Retail Enterprises, we used four (4):

• Productivity – deriving achievements for the company by being better operators
• Capital – improving the business through Capital (CAPEX) Investment
• Culture – creating a work environment that is positive and forward-thinking
• Growth – expanding through both organic initiatives and acquisition

Each of these pillars should track metrics and objectives to achieve those goals:

• Financial performance - “Increase profitability through operational efficiency”
• Customer/market - “Improve customer satisfaction and retention”

• Internal processes – “Create improved processes to optimize workflow”

• People & culture - “Strengthen team engagement and capability”

• Growth & innovation – “Expand our footprint and a create a unique proposition”

Set Targets, Thresholds and Key Performance Indicators (KPIs) for Each Objective:  Next up is to establish what success looks like through a series of financial and accomplishment benchmarks:

• Annual and quarterly targets
• Key mileposts achieved – do we go, slow or cancel an initiative?
• Benchmark comparisons (industry, historical, and targeted stretch goals)

Each of these targets should be well-thought through to assure accountability.  This includes assigning a single owner to each initiative along with any supporting stakeholders.  This will enable the owner to not only define the responsibilities of the initiative but be able to hold their team accountable to the activity of achieving the initiative.

Align Departments and Cascade Metrics:  Doing each of these initiatives in a vacuum will cause serious disconnect within the organization and create a disjointed strategic plan.  Each of the company-level objectives should be broken down into department scorecards and cascaded throughout the respective teams.   In addition, the KPIs of the initiative should dovetail with the overall company KPIs to avoid misaligned or competing metrics.  This step creates strategic alignment across the organization and optimizes all the work most efficiently.

Finalize and Communicate:  As I mentioned early on, the company scorecard starts with communication.  It is critical to overcommunicate this plan to share with leadership and their teams.  Along the way, you will have to train owners on how to interpret and use KPIs and explain how the scorecard connects to strategy, performance reviews, and incentives.  Handled on a semi-annual basis, this allows ample time to execute initiatives while offering mileposts and updates along the way.

Scorecards work best when tied to an ongoing performance rhythm that rewards the organization for achieving their objectives in a timely fashion.  It can also provide guardrails for the company to stay on task while at the same time, jumping ship on initiatives that have met a dead end.  Keeping the entire team aligned is the ultimate productivity tool for an executive team.

Want more ideas?  For more information on Gray Cat Learning Series, visit: https://www.graycatenterprises.com/gray-cat-learning-series