At WY Partners many of the businesses we work with use scorecards to drive the right focus from their teams. Put simply, a scorecard is a single place where a business can record and track performance data in relation to specified goals. Sometimes these scorecards are presented as interactive dashboards, other times as simple spreadsheets, but the goal is to provide the business leaders with the data they need to drive the right behaviour and make the right decisions.
Here we have highlighted some of the best practices we have seen in using scorecards to drive growth.
BUILD THE RIGHT FINANCIAL FOUNDATIONS BEFORE YOU IMPLEMENT A SCORECARD
Before a scorecard is implemented, the following three things must be in place and managed on a regular basis. Bear in mind that if a business doesn’t have a pipeline or forecast in place, it does take time to set up the systems and processes needed to ensure these are being managed well. It’s worth putting effort into doing this before putting a scorecard in place.
- Monthly management accounts that are being produced accurately and in a timely manner
- Sales pipeline – a single, accurate, up to date, pipeline that includes all your opportunities; repeat and new
- Forecast – accurate and up to date, including everything on your order book.
KEEP IT SIMPLE
When businesses decide on a set of targets to track over time they often start with a long list. Once the business gains a better understanding of what scores drive positive change, the list tends to be whittled down to between 8 and 15 items covering areas such as forecast, pipeline, revenue and staff and customer satisfaction. As a general rule, someone external should be able to read through your scorecard item descriptions and understand each one easily. The scorecard probably is too complicated if every time you look at it, you have to explain what each item means.
Businesses use scorecards to make decisions about how to run their business based on the data they have collected. If the data is inaccurate, out of date, or manipulated to make it look better than it is, you cannot evaluate it properly.
INCLUDE LEADING INDICATORS
An accurate forecast and pipeline are important for ensuring the business is run well from a financial perspective. Data such as the number of incoming enquiries alongside your pipeline number can help you keep track of how business development is performing.
REVIEW SCORECARD REGULARLY
You can have accurate, well curated scores, but if you only review them at monthly board meetings, you might have to wait up to six weeks before you can make any decisions based on them. To ensure everyone is focused, we recommend reviewing your top scores at least once a week.
ENSURE A SINGLE OWNER OF EACH SCORE
When you meet weekly to review the scores, make sure there is an owner for each score, who informs the rest of the team if they are on track or not. If you’re not on track, this is the whole team’s opportunity to talk about why and see what can be done to bring the number back on track.
REVIEW AND REFINE FREQUENTLY
A scorecard should evolve with a business to ensure that the scores being tracked reflect the areas that need attention at that point in time. It helps to review what needs to be reported on once a quarter so the focus is on the right areas.
GET THE TEAM ON BOARD
A scorecard can only drive the right behaviour if the team buys into the process. They must feel they own their scores and be committed to reviewing the data frequently to help make decisions. Scorecards are only as good as the data within them and the leadership team that uses them.
Talk to us if you want to find out more about putting a scorecard in place to drive the right behaviours in your business.
WY Partners offers specialist M&A and strategic advice to businesses who are seeking to either buy, sell or raise investment at the intersection of media and technology. If you have any questions or wish to discuss anything further, please get in touch firstname.lastname@example.org.