Collect the best information to monitor performance

To develop an effective scorecard, you must first develop effective questions. That is, you must identify those questions that will yield the critical information you require to plan your scorecard. This topic suggests some ideas to help you begin that process.

Decision makers need information to guide business performance, but what information? How can a business specify the indicators that spell success? When the correct indicators are used effectively to provide good information, the information flows smoothly into the organization. Typically, team members strive to improve the performance scores that indicators report. This inclination feeds a trend toward performance improvement. If the indicators show performance for key success factors, this tendency is a very good one. However, if the indicators report performance on the wrong factors, this inclination can actually derail organizational strategy.

The key to selecting the correct performance indicators is to understand what your organization wants to achieve. That is, understand what your end goals are, and understand the attributes of success for your organization.

The following questions can help you start to collect the best information to monitor performance.

  • What are the questions the organization must answer? What are the organization's goals?

    Most organizations collect lots of data. However, lots of data is useless if it presents more questions than it answers. Make sure that the performance indicators in your scorecard address the key questions that you must answer. For example, if you measure the number of customer service calls, you will learn how effective your telephone service is. If you measure the time that is required to resolve specific types of customer problems, you will learn how cost-effective the customer service team is.

    The performance measures that you use in your scorecard should serve your goals.

  • Why is the question important?

    Develop a way to decide whether the potential key performance indicators (KPIs) that you identify are, in fact, key indicators. At the end of collecting and organizing information, you must decide what is most important. As you begin to identify what questions you have to answer, determine why a particular question might be important and what that question might tell you about success.

    Often, Key Performance Indicators represent information that you must see regularly. Clarify why the KPI is important, so that you have the context you need to build a genuinely useful scorecard.

  • Where is the data?

    For a given metric or KPI, you must identify where the supporting data will come from. Sometimes, to calculate a metric along one or more attributes, you have to aggregate data from several different sources. For example, to create a metric “Top Selling products by gross margins”, you might need data from both a Customer Relationship Management system and an Enterprise Resource Planning system.

    At early stages, it is enough to identify the business system that holds the data. Later, you might have to identify more detailed sources, such as specific rows and columns in an Excel workbook, or tables in a database. In addition to that, you can identify whether your final report requires data from a specific source, such as multidimensional data for a complex filter or for an analytic chart.

  • How will they use the information?

    Find out why the users who will use the scorecard need the information.

    •  Why do the users need the information?

  • A summary report to stakeholders?

  • On-going monitoring of internal goals?

  • Identification of issues?

  •  How should the information appear? What kind of report do they need?

  • A detailed report that supports further analysis?

  • A multicolored graphic that depicts movement and relationships?

  • High-level indicators that show overall performance?

What do you want to do next?

See all steps required to build a scorecard

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