How to Build a Scorecard and Why They are Important

by | Updated August 13, 2021 | Business & Leadership

Stoneridge Software has long been utilizing weekly scorecards to gain business insights and plan for the upcoming week. Different from financial reports, scorecards offer information on actionable items and give managerial insights based on key performance indicators. They are an important vehicle for translating company vision into goals and allowing business leaders to track progress towards goal completion.

Why Use a Scorecard?

Managers understand the importance of adaptability and drawing information from a weekly scorecard allows for a weekly strategy reevaluation. Progress towards goals can be tracked and strategy quickly adapted. Scorecard information gives managers an objective look at the business and visibility into business trends. Every business will have issues, but how you manage your issues and move forward is a key component of business success.

Scorecards are only one part of how your business is run and are not meant to replace financial reports. Financial reports give a more complete range of information, whereas scorecards only present KPIs. Scorecards bring attention to trends early and ensure that an improvement plan can be quickly put in place.

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What to Put on a Scorecard

Every company will use different metrics on their scorecard, but the common metrics listed below are relevant across industries:

Cash and accounts receivable – This metric will let you know how much money you have in the bank versus outstanding, as well as past-due accounts receivable balances you may need to take action on.

Sales – No matter the industry you are in, every business should have last week’s sales on their scorecard.

Team member performance – Ask yourself how well-utilized your team was over the past week.

 

Metrics Based on Your Industry

Useful metrics vary widely by company and industry. Below are examples of metrics that may be relevant to your company. Read more in our blog called Finding the Scorecard Metrics that Matter to Your Business.

Metric example Industry
Web page views eCommerce
Number of back-orders Distribution
Weighted pipeline Any
New accounts open Banking
Warehouse capacity Distribution
Total loans approved Banking
Number of hours billed Services
Discounts as a % of sales eCommerce
New leads Services
Customer satisfaction eCommerce, insurance, etc.
Orders shipped per hour Any
Social interactions Any
Utilization Services
Kegs tapped per hour Brewing

 

Importance of benchmarks

Scorecard statistics must be related to a benchmark to plot against expectations. Benchmarks allow you to quickly decipher if you are reaching weekly goals. The best way to find a benchmark is by dividing the yearly target by 52 weeks. Benchmarks can also be determined using public data sources. For example, an agriculture business may benchmark according to crop prices.

 

Developing a Scorecard in Three Simple Steps

  1. Determine the data you want – The data must be relevant, accurate, and reliable in order to make good decisions based on that information.
  2. Surface the data – This is the most difficult step in the process. It involves getting data to the point where you can do something with it.
  3. Build your visuals – This step involves putting the data into reports that your executive team can reference. This step is relatively simple.

 

 

Data Platform

It is necessary to use a data aggregation platform when putting together a scorecard. Stoneridge compiles data from Dynamics 365 Finance and Supply Chain and Customer Engagement, manual entries, and web traffic when making a scorecard. Data platforms are used to compile sources into one platform.

Data platform options include Azure, Dataverse, data warehouses, and Power BI. Some companies may be using Excel to manage data today, but Dynamics 365 and other apps can help bring that data to life and retire outdated spreadsheets. Data warehouses or the Dataverse are the best option for larger companies as they allow for data aggregation across multiple entities.

It is important that the data compilation process is not very time-consuming as it has to occur on a weekly basis. With data in a central location, a Power BI reports are constantly updated on a set schedule, or can even be set to update in real-time.

 

Scorecard Format

Once you have decided which data to include, ask what the best way to visualize that data is. Visuals with benchmarks quickly inform you if a statistic is worrisome or not.

The scorecard is not an exhaustive document and KPIs should fit into one page. Additional detail should be made available on separate pages. After evaluating key metrics, managers are able to decide where to drill in.

 

 

Scorecard Lessons Learned

  1. Document your scorecard – Write up explanations for key metrics and train the leadership team on how to read it.
  2. If you don’t use it, lose it – Remove unnecessary metrics from the scorecard and change metrics as your business adapts.
  3. Most data is better than no data – Create a scorecard weekly, even if some data is missing. Estimations may be needed on certain weeks.

 

How Our Scorecard Helps Us Make Decisions

Our scorecard is reviewed in leadership meetings every Friday. Weekly scorecards help us ask and answer questions based on data. We also implement a quarterly enhanced scorecard for statistics that are best measured on a quarterly basis, such as retention and revenue per team member.

 

Learn more in the business & leadership section of the Stoneridge Blog.

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Stoneridge Software is a unique Microsoft Gold Partner, with emphasis on partner. With specialties in Microsoft Dynamics 365, Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP and Microsoft Dynamics CRM, we focus on attracting the most knowledgeable experts in the field to our team, and prioritize delivering stellar solutions with maximum impact for your business. At Stoneridge, we are deeply committed to your results. Each engagement is met with a dedicated team, ready to provide thorough, tailored, and expert service. Based in Minnesota, we intentionally “step into your shoes,” wherever you are. We focus on what you care about, and develop trusting, long-term relationships with our clients.

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