Scorecards have been a common theme at EOS sessions I have facilitated lately. In general, I find the EOS Scorecard is one of the most misunderstood tools in the EOS Toolbox.
But it doesn’t need to be.
For anyone who isn’t familiar, the Scorecard we use in EOS is a set of 5-15 weekly metrics, reviewed at your weekly Level 10 meeting. These metrics should provide you with a true pulse on the health of the business. It’s only 5-15 because you want to be tracking critical activities, not just anything that would be nice to know.
And here is where people wander off the path. The ideal metrics are leading indicators. These are activity-based metrics that will help you understand whether you are on track to hit your monthly or quarterly objectives.
The Scorecard doesn’t take the place of your monthly report or your quarterly financials. Those are still critical to understanding your business, but they are lagging indicators. They tell you what happened, while the Scorecard tells you what is happening.
- Leading Indicators are your “input” metrics—the daily or weekly levers you can pull to influence the future. They predict success.
- Lagging Indicators are your “output” metrics—the results you see on a report at the end of the month or quarter when it is often too late to change them. They report on past performance.
If you aren’t hitting your numbers on your Scorecard, someone should be raising a flag and an action should be taken to help course-correct before it’s too late.
Here is a sample of leading vs. lagging indicators:
- Calls made vs. Sales made
- Estimates sent vs. Revenue booked
- Cost per Click vs. Customer Acquisition Cost
- First Round Interviews vs. Time to Fill Seats
- Utilization Rate vs. Gross Margin
- Planned to Actual Task Completion vs. On-Time Delivery Variance
With metrics like these, you’ll see trainwrecks coming before they hit. You’ll be able to take action before you have to live with the consequences.
For most, uncovering these Scorecard metrics is challenging. We don’t seem to view our work in this way. But think about the frustration points in your business that you would like to change. Think of how measuring that behavior might help change it. If your staff know that the Leadership Team is starting to review how many timesheets were not completed, they’ll likely decide it isn’t worth having their name on that list.
So ask yourself: what makes for a good week in your business or your department, and what makes for a bad week? What happens to the work if someone doesn’t show up for a week? Where do you want your team to improve their performance? You might start to see some leading indicators to measure in there.
The one thing I can promise is that if you keep working at it and focusing on getting those metrics right, your Scorecard will pay substantial dividends.