How to Use Scorecards to Drive Higher Performance

Jun 29, 2022 ProCFO Partners shares how to get started with scorecards in your business

If the only numbers you or leaders in your organization ever see are long spreadsheets requiring a two-hour meeting held once each quarter… you’re doing it wrong. This article explores the value of scorecards – simple, specific reports that tell managers and leaders if they’re on track. Getting it right doesn’t have to be complicated.

What is a Scorecard?

A scorecard is a way for businesses to measure their performance and assess their overall health. It is a set of critical measures, often primarily financial but not necessarily exclusively so, that are used to track the progress of a company’s performance over time. Scorecards are used by many companies as well as governments, international organizations, and non-profit organizations.

At its most basic, a scorecard is a simple report of different aspects of an organization. They differ from regular reports because you can pick what goes on that scorecard. What goes on the scorecard and what you look at regularly becomes what you pay attention to within your company.

In other words, a cash flow or balance statement or profit and loss report are predictable monthly reports. Some reports might be public-facing. A scorecard is generally an internal instrument that looks between the lines on those more extensive reports and can differ between departments or managers according to the entity’s key performance indicators (KPIs). Time spent on a task, fuel or repair costs, number of sales conversations had – these are essential metrics for somebody, and their outcomes shape the considerable financial health of an organization. Scorecards help keep track of these details.

Who should use a scorecard to monitor and chart performance?

You should. Your direct reports should, and their direct reports. That doesn’t mean everybody needs to – or even should – be exposed to everybody else’s scorecards. But the old maxim is true – measure what matters.

There are no hard and fast rules about scorecards, just like there aren’t rules about financial or business reports. What you and your business need and want to measure are unique. Some smart practices, however, include:

  • Studying your goals to understand what influences the potential to achieve the goal.
  • Determining how often your scorecard should be updated
  • Determining who is involved in your scorecard

Scorecards are valuable and practical as a complement to regular reporting and reference toward goal achievement. Let’s look at a sales department as an example.

A sales rep might have a scorecard that includes:

  • Contacts made (like calls, networking meetings, pitches, etc.)
  • Opportunities created
  • Sales deals created from those opportunities
  • Deals closed
  • Revenue, especially as it relates to an individual revenue goal

The sales manager’s scorecard might include totals from all the reps showing:

  • Just the total number of deals created
  • Total number of deals closed
  • This, in turn, creates a closing percentage (the percentage of sales deals won to deals lost)
  • Total revenue

The VP of Sales or other C-Suite executives might have a scorecard that includes:

  • Total deals won
  • Total revenue

In this case, the more specific the sales responsibilities, the more detailed and granular the scorecard. Of course, there’s flexibility. The VP of Sales might have a weekly scorecard that updates total sales deals for the week, while a monthly scorecard shows the close rate and average sale amount. 

Keep It Simple (Or Don’t!)

Our guidance for scorecards, especially if you’re starting out, is to keep it simple. What are 3 or 5 metrics most meaningful to understanding your business performance? Start with those. Adapt to your preferences or styles – instead of measuring the total number of sales, maybe you just want to know if sales are up or down from last month. Or if you’re some percentage of the way to achieving a goal.

Again, the goal of scorecards is, generally, to be quick and glanceable. If you want to dive into the fine details, you can and should. But as an instrument for easy measurement, simpler is better.

Unless, of course, it isn’t! Here we’ll repeat that every industry, business, market and leader is different. You might want 300 points on your scorecard instead of three. Our caution is to ensure you’re not creating new or significant work in service of the scorecards, especially as you should already have monthly and quarterly reports of more significance. If it takes three weeks to craft a vast array of information and insights, you’re now in the realm of reports, not scorecards.

Getting Started With Scorecards

If scorecards are new to you, or if how you’re using scorecards could be easier or more efficient, here’s some additional guidance:

  • Use something you already measure as a springboard for your scorecard. If you do a monthly review, for instance, start with those reports and identify operational pieces that are key indicators of performance. Those KPIs are good scorecard starting points.
  • Think conceptually and contextually about your scorecards and the data they share. This will help you identify what information you want on your scorecard. What do we need to measure to know if we’re on track? Avoid the temptation to solve if you’re not on track – that’s a different exercise requiring different reports. The scorecard is your quick check, helping you decide what might need more investigation and when.
  • Again, consider a binary approach where possible. A scorecard is not a presentation delivered by the management team with twenty-six spreadsheets. The scorecard can articulate the basic business insights you need. Were we profitable this month, yes or no?
  • Avoid “scope creep” on your scorecard. Especially when starting with scorecards, it’s easy to think you want all the information at your fingertips or to think of it as an instrument for increased management of people, departments, processes, etc. The risk with this approach is you’ll lose the signal to the noise for what’s essential to you (or your department, etc.) This is why we recommend you start simple, minimalist, and with yes or no KPIs when possible. Add details where necessary.

The Role of your CFO

The CFO should be a key partner in helping develop scorecards across leaders, teams or departments. They can suggest essential KPIs to score and appropriate timeframes, help manage or understand relationships between different scorecards, and help clarify the best approach to your scorecards.

An experienced CFO can also help you realize non-financial KPIs for your scorecards that impact goal achievement or performance but aren’t necessarily the stuff of detailed financial reports.


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