Scorecard Best Practices

Reasons for Implementing (Operational Versus Strategic)

Scorecard systems can be used for different purposes, two of which are operational control and strategy management.

As an operational control tool, the focus is on KPIs for control and possibly measuring progress toward organizational targets or benchmarks. In this type of operationally focused system, emphasis is more typically on the inputs to operating processes (see Exhibit 2.4 ).

Exhibit 2.4: Input and Output Measures

For example, in a manufacturing organization, the control focus might be on tracking input measures such as materials, labor, and equipment usage required to produce product. Tracking these input measures will assist in providing a predictable and consistent understanding of product cost quality.

For a service organization, the focus might be on tracking input measures such as effort spent by front office, back office, and supervisors in providing services to customers. Tracking these input measures can provide an understanding of cost and efficiency of service.

In both operational control examples, the measure results being tracked are important to control the day‐to‐day business, but understanding of these operational measures alone may not indicate progress toward a strategic objective or related outcome measures such as providing excellent quality products or providing extraordinary customer care. If ...