Keeping Score in Business– Measuring, Scoring… Critical for Business Success: Not Measuring; Not Scoring; Not Competing…

Keeping score: Measuring and keeping score are critical for the success of a business– they are guides, they are indicators, they are numbers, they are the underlying activities that drive the business… According to Ronald Snee; failing to measure is like not keeping score in football, or any competitive sport… Translated into business terms: If you’re not measuring, you’re not competing…

Every business must keep score; successful businesses look at the numbers and see how they are doing– some days there are winning scores and other days there are failing, this is the way it is in business… But, without an adequate and appropriate scoring process it’s virtually impossible to know, understand, and improve the key drivers of business performance…

However, measuring badly can be even worse than not measuring at all, because it can be misleading– positive or negative– and create false sense of security or failure that can lead to disastrous actions… Whether you’re failing to measure, measure badly or measure the wrong things... the ultimate business consequence is the same: You are putting your business in jeopardy by not fully understanding your performance and positioning relative to the competition…

According to Bruce Rector; how many times have you sat through a great strategic planning session– even inspirational, where many  innovative ideas and plans were discussed– but nothing happened; it’s as if all the energy remained in the room after the participants walked out... I expect that this has happened to you, which is why when you use words like ‘strategic planning’, ‘mission’, ‘vision’, ‘value’, ‘goals’… everyone’s eyes glaze over and roll because they’ve ‘been there and done that’… These initiatives sound good but without identifying the associated key business performance indicators-measures… that drive the initiatives it’s very difficult to take planning sessions seriously…

Measuring and keeping score brings clarity-substance to the initiatives and enables employees, that are responsible and accountable, to effectively monitor and track the key performance drivers… and to take corrective action that may be necessary to achieve the desired business results...

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In the article Keeping Score Boost Employee Performance? by Lee Colan writes: You must keep score in order to know whether the business is making progress, but you should only track the most important metric, i.e., measure only what matters most– key drivers of business performance… There is no lack of things to measure but be selective– you can monitor many of your business performance indicators but only seriously track and keep score on the few important measures that really matter to the–

Bottom line, employees, customers… Of course, if you are going to keep score, you need a scoreboard: You should design one that’s simple, clear, easy to update, and that resonates with the team… Keeping the scoreboard up-to-date is critical… If your scoreboard doesn’t contain the current score or is not seen as a reliable reflection of current performance… progress will no longer serve as a motivator and the scoreboard will lose its power to boost results…

Be creative and use the scoreboard to tell a clear and compelling story in as few words-numbers, as possible. Consider some of these scoreboard formats:

  • Thermometer with rising mercury line to show progress.
  • Traffic light (e.g., red, yellow, green indicators to show– off-plan, slightly off-plan, or on-plan, respectively).
  • Jar of jellybeans to illustrate percentage of completion.
  • Emoticons or visual indicators such as thumbs up/thumbs down next to each goal.
  • Picture of an actual scoreboard to keep track of revenues, new deals, market share, customer referral… metrics that are most important to the team.

In the article Turn the Business Into a Game and Keep Score by Ron Carroll writes: It’s the combination of great people and great systems that produces great companies. When you add the elements of fun and competition– when you turn your business into a game and keep score– you discover the grand secret to developing a truly remarkable company. People will actually pay for the opportunity to ‘work hard’ when they enjoy what they are doing. Recreation and sports generate enthusiasm, energy and motivation not usually found in work-day activities…

So if you can transform employees feelings about their jobs from stressful, unrewarding, even boring… into a game-like atmosphere which is fun, engaging, fulfilling, competitive… while keeping score, then that has all the elements of a successful business… According to Charles Coonradt; management must turn resources into results and the more efficiently they do this the more successful the enterprise, which means focus attention on the most important resources and the most effective results, and keep score

Score keeping must be simple, objective, self-administered and provide frequent feedback during the process… Employees should not depend on a supervisor to tell them how well they are doing; they should know the score as the game progresses… Effective score keeping are comparisons between current performance, past performance, and an accepted standard… If you want to improve the quality of performance of any activity, you simply increase the frequency of feedback…

Without score keeping, there is no glory! Winning makes the game of work fun, brings the best out of players, and creates an extraordinarily profitable business… Take Action: Establish a measuring system that let’s you know ‘frequently’ how much closer you are getting to the goal. Focus attention on the 20% of activity that produces 80% of the results. Find and work the key numbers that drive the economic engine of your business. Compete, work hard-smart, expect to win, and have fun!

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In the article Myths of Performance Measurements by Pietro Micheli writes: Flawed assumptions undermine the success of much performance measurements… Investments in performance measurement systems have been steadily increasing over past two decades, and there is no sign this trend will change in the future. Leaders and managers in both private and public organizations regard such systems as a key means to implement and communicate strategy, support decision-making, align behaviors, and, ultimately, improve performance…

While measurement systems can, indeed, help organizations achieve all these fundamental aims, current practices show that managers are consistently making mistakes which prevent them from reaping the benefits of their investments. While their intentions are usually positive, research shows that, in fact, they often encourage exactly the behaviors their organizations neither need nor want:

  • Myth: Numbers are objective: Not necessarily. The quest for perfect, objective data is likely to leave us frustrated and disappointed. Performance data is, in fact, ambiguous and open to interpretation, and its use and impact on performance depend on      commonality of interpretations…
  • Myth: Accuracy and precision are paramount: The crucial question is not– Is our data as accurate and precise as possible? But: Are we getting data that is good enough for our purposes?
  • Myth: Data is value-added: Few would challenge the assumption that gathering and analyzing data is a value-added activity. But actually, those few would be right. Value is generated when data is used, but we know that performance data is very rarely used within organizations.
  • Myth: Top-down alignment produces good results: Sufficient  discretion should be left at every level to make decisions over which indicators to use and which targets to aim for.
  • Myth: Targets, rewards result in effective motivation: Performance  targets, indicators and rewards are often utilized to focus attention and motivate staff. On paper, it’s a great idea but in practice levels of engagement in many organizations are falling.
  • Myth: Tightly aligned performance measurement systems enable change: The use of new performance targets and indicators can, in fact, kick-start the implementation of new strategic objectives and promote different ways of working. While certainly the case for various organizations; measurement systems have often acted as obstacles rather than enablers. Particularly when a system is pervasive and consists of a large number of indicators, then organizational inertia may arise.

In the article Keeping Score by John Case writes: The idea of putting numbers on a score board has a checkered history. Ten or 15 years ago companies discovered (or rediscovered) a simple truth about human nature, summed up in the adage– What gets measured gets done! But the real truth about human nature is that ‘what gets measured does get done, but only for a while’. Then other human reactions are likely to cut in, such as– Who cares if we make those numbers, anyway?

A chart that tracks performance can come to feel like an edict from management; make the numbers or else… When people believe ‘big brother’ is watching them, they do exactly what they have to do, and no more… But, what happens when people see that information month-in and month-out? They learn the connections between– work-groups, department performance, and ‘big-picture’ results… as well as, the knowledge about why the ‘numbers’ matter…

Since there’s no law requiring practice of ‘open-book’ management, the ‘big-picture’ numbers may be something other than actual sales or profits. But, regardless of the actual numbers the message is the same: Employees understands that it’s the real measure– it’s the measure of the business’ relative success and thus an indication of job security and opportunity… According to Douglas Devlin; it’s the feedback that makes the difference; as employees learn not just to watch numbers but to take responsibility and ownership for them, and sense of responsibility for making the numbers turn out right.

score thCAJZSGTH

Many organizations spend thousands of hours collecting and interpreting data. However, much of this effort is nothing more than wasted time… in many cases an organization is analyzing the wrong measurements, which leads to inaccurate decision-making. According to Graham Brown; measuring everything is more damaging than measuring nothing– pinpointing the vital few important measures is the key to success…

According to Robert Follett; many business people don’t even fully understand the meaning of keeping score in business. For example, financial reports are scorecards but they don’t tell the whole truth about a business… Remember that financial reports are not the only or even the most important measure of what is valuable in business, for example; value of people or innovation or relationships… and, many other business intangibles are not represented by the numbers in a financial report. 

So, use financial reports as a tool to help achieve important and worthwhile goals, but don’t be dominated or mislead by the numbers in a financial report… According to F. John Reh; metrics are the scores that tell you if you are getting closer to your goals… they are guides, they are indicators, they are numbers, but you can’t change the numbers by managing the numbers; you change the numbers by managing the underlying business activity that contribute to the numbers…

Imagine attending a football game or any competitive sport and you find that no one is keeping score, which make the game seems pointless, uninteresting… the same is true for business– keeping score tell you how you are doing, where you going, what adjustments are needed to win– now that’s interesting…