WHAT DO YOU NEED TO SEE? DASHBOARDS VS. SCORECARDS
Determining the best way to ‘see’ your business for making the right decisions
The question as to the difference between dashboards and scorecards comes up constantly. This is due to many companies now using the terms interchangeably. Using the rule of thumb that for every person who asks a question there are at least ten more that also want an answer, a quick discussion here might be in line. Some comments will also be discussed surrounding what the role of each is, suggestions for each type of system, and which might be more relevant to your business (or business unit).
The names ‘dashboard’ and ‘scorecard’ are well chosen with respect to their real-world usage. A scorecard being part of a broader corporate methodology or management discipline and is a report card of how a given person, business unit or entity performed with respect to certain goals over a given time period. A dashboard being a set of indicators about the state of a process, piece of equipment, or business metric such as cash on hand or YTD sales at a specific point in time.
Scenario
An example should make this very clear. Consider a manager responsible for the customer support function at a large enterprise. Their scorecard could contain criteria such as:
Median issue resolution time
Mean issue resolution time
Percentage of issues resolved at first contact
Percentage of issues resolved within a certain amount of time
Mean follow-up satisfaction survey result
Utilization of contact center staff
These would all look over a period of time (usually monthly or quarterly), and would be typically be baselined against specific goals, either in absolute terms or as improvements versus a prior period.
The dashboard for this manager might contain indicators such as:
Number of inbound calls in queue
Number of calls in escalation
Current hold time for inbound calls
Current hold time for escalations
Current CSRs online
Average Call Resolution Time (Trailing 1 hour)
Predicted hold time in two hours
With the exception of the average resolution time, all of the indicators would show the state of the world at the exact instant the dashboard is viewed (or refreshed). Many of the indicators would best be shown with a trend line as well (so one can see if the call queue is growing or shrinking, for example).
Just based on these examples, some distinctions can be discerned:
Scorecards inherently measure against goals, dashboards need not; said another way, dashboards present raw news, while scorecards are editorials of sorts.
Dashboards can provide tactical guidance while scorecards can assess the quality of execution.
So which one do we want?
For most companies, both dashboards and scorecards may have value. Scorecards are of value in almost any business, the answer for most companies is "both." The better question is where should each of them be used?
Dashboards work better for data in fine time-slices (hours or minutes), while scorecards tend to be better-oriented to data that is more appropriately understood over a longer time context (weeks or months). Consider the cycle time of the activity driving the data. For example, the manager of an outbound tele-sales campaign for credit card protection services, in which the sale cycle is measured in minutes, could benefit from a dashboard (for example, to see how changes in a call script impact conversions). On the other hand the VP of sales for a large sales channel is more interested about activity by week or by month, which fits better into a scorecard model.
The closer to the line work, the more value dashboards have. Rolled-up data aggregated into a dashboard usually doesn't offer a great deal of information. In addition, a focus on thinly time-sliced data can prove a distraction to strategic thinking. For example, there is little value to a VP of manufacturing for a multi-site operation seeing unit production per hour in real time, while there is substantial value in looking at unit comparative trends in daily or weekly production.
Dashboards are usually ineffective for project-driven businesses or business segments because there are very few meaningful indicators that work in a real-time dashboards. That is not to say that one can't and shouldn't monitor project performance, but there are few real-time metrics that can be applied to your research and development or new product launch groups.s
Consider the following advice regarding scorecards
There is much written about scorecards in a corporate environment. Overall, consider their ability to align an organization and enhance the level of accountability in the organization as well.
Integrate Scorecards with Corporate Planning - Take a company that wants to develop a scorecard system to be integrated into the entire corporate planning process, to link corporate strategy to individual executive and manager goals. In this model, the executive board would perform high-level strategic planning and define goals for the CEO. The CEO then meets with his subordinate and develop objectives derived from the CEOs goals and integrates those into the system.
In turn, those top-tier executives meet with their subordinate and so on. The system actually requires that each subordinate goal can be tied to one or more goals of their manager (or manager's manager, etc). At the end, the net result is that every tracked goal in the entire company can map back to a corporate objective developed by the board. And, as the CEO said, "If it can't be traced back to the corporate goals, why are they doing it?"
Develop Scorecards Wisely - If you have perverse incentives then you'll encourage perverse behavior. Anyone who has managed a sales organization has probably seen this in action, for example providing a spiff to encourage the cross-selling of a new product only to see the sales force sell lower-margin product as a standalone offering, netting large commission checks while killing the bottom line. The key point here is that if you are developing a scorecard with rewards assigned to particular performance objectives, make sure those performance objectives really align with the organizational objectives.
Make Them Part of The Culture - Scorecards are fundamentally part of a culture of accountability. If scorecards are well-designed, they are effective tool for setting and tracking corporate goals. If accountability, in terms of performance rewards and penalties, are not part of an organization's culture, or won't become part of it, then you might be better off saving your money.
They Don't Absolutely, Positively Have to be Fully-Integrated - The company mentioned above did not have their scorecard application wired into all their other systems. Some of the data was entered manually by division controllers and others. However, it was minimal effort for the payback, and it eliminated a significant time obstacle to implementation. The system we created for them supported data feeds as well, so as their systems environment stabilized, they could start feeding that data to the scorecard incrementally. Integration is the ideal, but don't let the cost, time or challenge of integration interrupt the partial automation of the process. The partial-automation solution they achieved improved substantially on a very manual scorecard process that was so labor-intensive that it prevented scorecards going deeper than the first layer of executive management and was even then typically not well-maintained.
Consider the following advice regarding dashboards
Use Actionable Indicators - Sometimes dashboard indicators are chosen based on information that is readily available or that has "interesting" patterns (because its sexy). Choose indicators that will inform an individual of actions to take.
Find Leading Indicators - Dashboards with lagging indicators aren't very useful. In the car analogy, lagging indicators would mean you would know you had a full tank of gas last week or that you were going 65 MPH 20 minute ago. In either case, you could be out of gas or having a chat with a friendly officer.
Provide Alert Points and Set Them Sensibly - Again, good dashboards on cars have indicators that let you know when you're approaching a danger zone (for example the red and orange bars on the speedometer and tachometer).
Not Everything Has to Be Precisely Real Time - While most dashboards indicators do need to have relatively up-to-the-minute information, it isn't always critical to have up-to-the-second data. For example, a dashboard for someone in charge of a tele-sales organization doesn't need to know what sales are right this second. Even if the information is an hour or two old, it is most likely still sufficiently current to take action. In other words, slightly delayed data is usually better than no data.
But, Some Things Do Have To Be Practically Real Time - On the other hand, using the example of the call center manager, knowing the average hold time from this morning would not be very helpful, because it is too late to take any kind of corrective action, for example allocating Tier 2 support to answer incoming calls to get the hold time down. Sometimes, data has a very short shelf-life. If you can't serve it quickly enough, don't create noise.
Manage Information Visibility - Given the increasingly limited attention span of many people, it can become a distraction for some people to have too much real-time information. Some of you may remember how obsessed some people became by watching their stock portfolios during the late 1990's. Few sane investors would prefer a CEO who was focused on minute-by-minute stock price fluctuations as compared to month-over-month or year-over-year share price performance.
Integrate Dashboards Into the Desktop or a Portal (or provide interruptive alerts) - Due to their nature, dashboards are something that one needs to keep on eye on for them to be useful, but if they end up hidden behind applications then their usefulness is diminished. On the other hand, if the dashboard always needs to be visible, or the user must constantly switch applications to see the dashboard, it can become inefficient and distracting. If a company has a sufficiently advanced portal system, incorporating the alerts into the portal is an option. Other possibilities including a small application as a "ticker" that can be down in the corner of the screen or having a system that provides interruptive alerts when alert points are reached.
Now, look at your own business. What do you need to see? Think back to the decisive choices you’ve made. Were there indicators that would have made you feel more confident about your decision? Moving forward you can now see the benefits of both dashboards and scorecards and they can clarify the ‘big picture’.
