Rebuilding a scorecard the right way

Good decisions are generally made within the correctly framed context, without which the degree of validity can’t be proven. While skipping due process is faster line, it puts the quality of the decision at risk. If you’re dealing with something where time sensitivity is high, you may have to rely on your intuition to a greater degree. However, in the case of selecting corporate level measures, there is a great deal of risk in not putting the appropriate level of thought and process into determining the “right” collection.

The scorecard, when used appropriately, drives all kinds of behaviors at all levels of the organization. What you’re hoping for is that they drive the behaviors that support what you’re trying to accomplish… that support your strategy. To that end, measures either support there are essentially three categories of measures:

1) General business measures: they give you some sense of what is going on, but are essentially a distraction from a more dialed in metric
2) Those measures that drive the wrong behaviors: those measures that haven’t been well thought through, and result in people focusing on behaviors that are either neutral to your success (distraction) or negative
3) Transformational measures: those few measures that drive all the right behaviors, as defined by your strategy

Most often, people respond to the accountability asserted by metrics in a very literal way. If your measure for success is the % of project deliverables completed, that’s what people will focus on. If you want people focusing on the quality of outcomes originally intended, you have the wrong measure. If your measure for success is employee satisfaction, that is what people will work to achieve. If you change that measure to employee engagement, the goal has fundamentally changed… and behaviors will change in suit.

If you find that your scorecard is tired or lacks alignment to strategy, how might you approach a project to maintain appropriate context for each step in the decision making process:

1) Acknowledge the sensitivities and human tendencies: get this out of the way, determine how you’ll manage it
2) Tie it to strategy – determine how you’re going to ground the output in your strategy: doing this well requires the thinking that goes into the construction of a strategy map
3) Start with measurement objectives, determine the exact metrics afterward: you can’t select measures until you know what the strategy it meant to drive out – once you have this, you can select and replace measures until they drive the right behaviors
4) Build the measures, define it in a lot of detail: define everything that you’d need to know in order to understand the results – this is the reason that measures exist, then you can share this across the organization
5) Think carefully about how you’re going to roll it out: Link back to point 1 where we acknowledge all of the sensitivities – and then do this in a way that positions people for success
6) Don’t be married to measures that aren’t working: Now that you have a strategy map and measurement objectives, you’re no longer blindly married to metrics that may be hurting you or acting as a distraction from the real drives for your success – stay flexible

Creating and capturing potential

The reality about strategy is that it’s not like most other aspects or functions of your company… it completely determines the potential you have for success. Good strategy creates potential, good execution captures potential. It’s almost invariably true that your organization has both limited the creation and capturing of its own potential in some way, so both of these facets have to be constantly managed. Corporate success rarely happens by accident, and repeatable corporate success certainly doesn’t.

The greater mystery to most organizations isn’t the recognition of an attractive future state, it’s how to translate that into action. How do you take a vision for the future, and then align the resources, creativity, behaviors and energy of 10, 100, 1000 or 100,000 employees in support? Beyond having them exhibit most of the right behaviors, how do you turn them into passionate disciples of your own brand, a pre-cursor to your customers doing the same.

A starting point is to look at how much of a mystery you’re currently letting this translation be for your employees. Figuring out how to translate strategy into measures that consistently drive the behaviors that enable your strategy and building a personal performance management system that fully drives the most critical behaviors and alignment is hard work, requires a lot of complex thought and discussion. This is more often than not where organizations leave opportunity on the table. When you don’t provide a clear, compelling connection, people almost automatically fill in the blanks (of their performance plan) with operationally driven priorities. In the absence of real strategy, what else would they use? In these moments, your strategy fails to drive the organization forward toward your vision.

Ask yourself these questions:

Do our leaders clearly and passionately understand what we’re trying to accomplish?
How many of our employees are passionate disciples of our brand?
How do you make it easy for employees to understand their role in making the strategy happen?
Do we measure the things that will drive the right behaviors, corporately and individually?
Can you walk around the building and get a consistent answer on what the corporate strategy is all about?

Note to small companies: smaller organizations often work under the assumption that strategy has to be scaled for the size of the company (true), even to the extent that having metrics shouldn’t apply to companies with less than 100 employees (untrue). The amount of rigor you put into managing reporting mechanisms isn’t the issue, it’s one of whether you have defined what is important… and whether you’re paying attention to it consistently.

Final thought: Diminishing returns doesn’t apply to strategy done well.