Determining Scorecard Metrics to Track that Benefit the Enterprise as a Whole

The scorecard and dashboard metrics created in business are often created around corporate strategies or an organizational chart. These measurement creation approaches can initially seem appropriate; however, these techniques can be problematic and lead to unhealthy behaviors.

Consider,how metrics created in organization silos are not orchestrated relative to the overall corporate needs. In addition, these metrics can change whenever there is a re-organization and are often tied to goals that can be arbitrarily set and unrealistic.

In addition, consider how variance to metric goals can lead to playing games with the numbers, which can be destructive to the business as a whole. Red-yellow-green scorecards can lead to firefighting, which drains resources. In addition, resolutions from red-yellow-green scorecards are typically short-term at best, as described in the article “Predictive Performance Measurements: Going Beyond Red-Yellow-Green Scorecards“)

The balanced scorecard approach for metric selection after strategy creation can lead to subjective metrics and measurements that are not long-lasting and are a function of economic and leadership changes.

An organization might from a big-picture business point of view create metrics from evaluating its value chain steps of developing, marketing, producing, selling, and collecting payment for the products and services it offers. This described high-level relationship typically does not change over time.

Ogranizations that align their scorecards to these functions can create a long-lasting metric system that remains consistent with reorganizations and strategy changes. The system for doing this would integrate functions with silo-avoidance thinking; i.e., which can lead to sub-optimizations that are no whole enterprise beneficial.

This system for metric creation is described in Are Your Business Metrics Measuring the Right Thing? Don’t base your metrics on your organizational chart.