Back to the flamingo. Every month, support-services manager Heather Patrick tapes the "water level" onto the side of the pool. That's the company's year-to-date profit, and employees are learning that the profit level determines how much is available for their bonuses. Every month, too, Patrick moves the flamingo up the ladder that goes to the diving board. That scale shows the goal for Haworth sales, and the flamingo's foot marks the progress of Elements IV Interiors toward reaching that number. If the company hits the goal, the flamingo dives in--so to speak. Meeting both profit and Haworth goals triggers quarterly payouts.
Elements started out scoreboarding only those two numbers. As scoreboarders become more experienced, they learn to put up a cascade of numbers--tracking, in effect, all the lower-level metrics that drive the company's key objectives. A few miles down the road from Elements IV Interiors is Gasper Corp., a $6-million developer of management systems for banks' computer networks and automated teller machines. Where's the scoreboard? Well, there are dozens of computer-generated charts plastered all over the walls, but the up-to-the-minute data are stored in an intranet, where they're available to all the company's employees at the click of a mouse. Open up the home page and you see a menu guiding you to the data. Click on "Gasper Corp. Key Success Factors" and you call up the latest information on the number of new orders, the revenue from new orders, the anticipated revenue from systems sold but not yet installed, and the revenue from maintenance of installed systems.
At Gasper, the key success factors focus on revenues. "That's where the greatest variability is," explains founder David Gasper. To realize the company's revenue goals, salespeople have to hit their targets. Installers must work efficiently, getting new systems up and running on schedule. Tech-support people need to respond to problems quickly and effectively so that word of mouth about Gasper remains favorable. Software-development teams have to be on time and on budget with new releases so that products don't fall behind in the marketplace.
Not content with keeping all the data on the computer, Gasper puts the charts on department bulletin boards and in conference rooms so people can see the information, talk about it, and act on it. A recent problem with timely complaint resolution, for instance, showed up instantly. "When something like that happens, we're all trying to look for solutions," says Mark Marratta, a senior software engineer.
Building buy-in and unleashing creativity
The new scoreboarding is essentially a learning process. But what makes learning effective? As any teacher will tell you, it's when learners participate actively in the process rather than watching passively from the sidelines. Scoreboarding gets employees involved in their own learning. That means that they not only grasp the objectives--and the many numbers that drive them--at a gut level but also take on those objectives as their own.
Check out how the process has unfolded at CompuWorks, the computer-systems integrator. Last year a team of employees at the Pittsfield, Mass., company painted a big section of office wall green and marked off 52 weeks along the bottom. Up the left side, they inked in net profits in dollars. Then they stretched various colors of ribbon diagonally across the makeshift graph, indicating their goals for weekly performance. (The blue ribbon, indicating CompuWorks' ambitious plan, was promptly labeled "Al's Pipe Dream," in honor of president Alan Bauman.) As the year progressed scorekeeper Kristin Czelusniak stuck pushpins into the scoreboard once a week, showing the level of profits earned that week, and tied red yarn to the pushpins. Over time, the yarn created a handy chart of performance actuals that could be compared at a glance with performance benchmarks.
This year a series of strategic-planning sessions produced new goals--another Pipe Dream--and the big board was updated accordingly. This year, too, the whole company began to sprout scoreboards. (P.S.: The company is currently beating this year's version of Al's Pipe Dream.)
CompuWorks calls itself a systems integrator, but it makes money in a variety of ways. There's a sales department and a service-and-installations department. There's one group that develops custom software and another group that conducts computer training classes. The company's plan called for revenue and earnings contributions from each of the departments. The departments themselves had to figure out how to get there and how to measure their progress.
The solution? More scoreboards. Groups got together to brainstorm. What are our key numbers and our targets for improvement? Where do we have to be each month? And then the plaintive question: Has anybody here got any artistic talent?
Some did. In the custom-software group, Marianne Hall designed a striking Yellow Brick Road scoreboard, with sales dollars up one side and the wizard in a balloon marking progress. And what drives sales dollars? "We have two things we do," explains programmer and analyst Deb Van Tine, "billable time and internal time. So you can see"--she points to the scoreboard--"here's Dorothy, representing billable time, and here's the witch, representing internal time. We want to have Dorothy ahead all the time."
Other departments were more modest--not to say artistically challenged--in their efforts. The sales department produced a picture of nearby Mt. Greylock, with numbers indicating total sales, gross profit, and sales expense per gross profit dollar. The training folks created a vase with paper flowers: hit certain targets for billable hours or students trained, and you get to put a flower in the vase. The service department contented itself with a whiteboard-and-marker chart indicating each person's percentage of billable hours by month. Every department established targets by month, quarter, and year; each had a small budget for rewards if it reached its goals. Presto: everyone was working for objectives that fed the pushpins on the big green board. "People don't necessarily feel they can change the big board directly," says Bauman. "What they do feel they can do is change their numbers."
Performance management
Scoreboards force a level of accountability--hence performance--that's often missing in small companies. The numbers come in fast, usually every week. They're watched not just by the CEO but by every manager plus quite a few employees, so problems get addressed faster. "It's the feedback loop that makes the difference," says Douglas Devlin, chief financial officer of TriNet VCO, a 100-employee, $250-million professional-employer organization in San Leandro, Calif. "Communicating the company's progress lets managers and employees see the effect of their work. It definitely has a positive impact on performance."
