Most large companies and nonprofit organizations have boards of directors or trustees that govern and oversee their operations. Other types of boards are even more useful in running operations.
All of us use the scoreboard and dashboard frequently. They're most useful in knowing what is happening. Imagine going to a sporting event and finding the scoreboard missing or not functioning. The fans and players would find it very frustrating not knowing the score. Even more frustrating and risky would be to drive a car with a non-functioning dashboard. These two boards have great application in running a company too.
The scoreboard represents the critical success measures one keeps to determine if we are winning or successful in our business. Profit is probably the overall scoreboard measure used most by owners and managers. Other key measures one might find on a company's scoreboard are safety (incident rate), customer and employee satisfaction and days of sales outstanding.
Dashboard indicators should be in line with the corporate scoreboard.
Any measure used on the scoreboard is there because it tells how we are performing in key areas of the operations. Managers can quickly tell if we are winning or losing by looking at the scoreboard measures.
The advantage of using the scoreboard concept is that it forces senior management to be clear on what measures are most important. Just like the scoreboard at a game, the company's performance scoreboard can be seen by other managers and even employees, providing a common platform to discuss performance.
We increase accountability by assigning senior managers as sponsors of various scoreboard measures. Sponsors are responsible to answer detailed questions on why certain measures are over-or under-achieving established goals. By having the scoreboard displayed to employees it sends a clear message of what is important to management. Usually the old adage of what gets measured gets done holds true and people work harder to win.
The most useful scoreboards are ones where senior managers collectively agree on what the key measurements should be, thus taking ownership for them. They review the score regularly with their employees. Without these key measures and the review process, departments and managers tend to focus on their own pet measures, leading to mixed and sometimes conflicting actions.
At Miller Bonded Inc., a mechanical contractor in Albuquerque, N.M., managers hold monthly meetings to review their key performance measures. Where measures do not meet expectations, they determine corrective actions.
While the scoreboard gives visibility of our company's overall success, it has a major weakness in how we manage the company. It's late! We usually don't know the month's score until 10 to 15 days into the next month. By then any corrective actions taken may be too late to prevent additional losses for that month. After-the-fact measures are good for executive meetings and trend analysis but are limited in getting to the root causes and timely preventive measures.
Enter the dashboard. Just like driving a car, this measure or what I prefer to call indicators are of most value while we are driving and of little use once we reach our destination. Dashboard indicators should tell us our company's speed, fuel supply and temperature. Financial indicators could include: cash available each day; dollar amount of invoices 90 days uncollected; and inventory levels.
Safety indicators might include: attendance at training sessions or tailboard meetings; number of safety inspections conducted; safety-related work orders completed; pre-task planning completed on time; and safety suggestions reported and implemented.
Customer satisfaction indicators could include complaints received and resolved this week as well as RFIs and change orders outstanding.
Employee satisfaction indicators might include: absentee rate this week and month to date; number of improvement ideas or suggestions submitted this week; and number of unfilled positions for more than a week.
Operations indicators could include: productivity rate; percent of planned work completed this past week, or PPC; percent of bids won or lost this week or month; service calls per day; rework required this week; shop hours worked or scheduled this week; and unscheduled overtime worked this week or month.
A company should have only one scoreboard set of measures. If every department creates its own scoreboard, chaos will result. There can be many dashboards indicators as some fit only certain functions or operations while other indicators may be universal.
The important consideration for dashboard indicators is they should be in line with the corporate scoreboard. We want alignment of key measures to ensure alignment of actions.
Safety is a good example where the scoreboard measure is the incident rate and the dashboard indicator for operations could be pre-task plans completed on time and for every job. The dashboard safety indicator for the administrative staff may be "safety meetings attended."
In sports it is important to know the score, the time or innings remaining and other key measures. In driving a car it is very important to know your speed, temperature, fuel level, etc. In running a company we need both the overall score and the leading indicators. We are then better able to manage by facts and not shoot from the hip.
Both the scoreboard and dashboard help us be better managers.
Dennis Sowards is an industry consultant and trainer and head of Quality Support Services. Contact him at 480/835-1185 or at [email protected].