Sometimes the numbers are so much on track that the scoreboard gets--well, boring. That's when it's time to plug in new numbers to watch. TriNet has a "dashboard" scoreboard, complete with dials and gauges representing revenues, subscriber head count, and other key variables. One section of the dashboard is a space that each department uses for the numbers it wants to track--numbers that are likely to change as issues are resolved. TriNet's payroll department, for example, tracked the timing on its electronic submissions to the bank "because," explains Devlin, "we were getting close to our banking deadlines on peak days." After a while the department got its procedures under control and submitted the payroll in plenty of time, so the metric disappeared from the scoreboard. Says Devlin, "Each month, we ask the managers, 'Do you want to change your gauge?' We want every department to have something that's meaningful to them on there."
But the real value of scoreboards comes over the long haul, as people learn not just to watch numbers but to take responsibility for them and as employees incorporate the scoreboarding process into their year-in, year-out approach to the business. An exemplar of that value is Neilsen Manufacturing Inc. (NMI), a precision sheet-metal job shop and assembler in Salem, Oreg.
Sales at NMI have been up an average of 17% a year over the past five years. The company recently added 65,000 square feet of manufacturing space. On the shop floor, robots and humans operate state-of-the-art cutting machines and presses seven days a week, 24 hours a day. The company provides high-value-added parts and assemblies to customers such as Hewlett-Packard and Tektronix.
NMI president Tom Neilsen began scoreboarding a few years ago. First he assembled a team of employees and managers to identify and agree on the key measures. Some were financial: sales, direct costs compared with budget, indirect expenses. Others were nonfinancial, including on-time delivery, customer returns, and in-house quality incidents, such as a part that needs to be reworked before it can be shipped. "We felt those were important for our long-term success, over and above our financial performance in any given period," says Neilsen. The team created a scoreboard that awarded points when performance met plans on each measure, dubbing the sum the Health Index. The Health Index itself was posted in the lunchroom and in the corridor, where customers (and anybody else) could see it. On the wall of Neilsen's office--open to all employees, the office serves as a small meeting room when he's not there--were full financials, along with all the other hard data that lay behind the index.
Today the index is gone, replaced by a bevy of 8 1/ 2-by-11-inch graphs and charts. "We wanted to shake up the troops a bit by changing the way we presented the material," says Neilsen. Some charts are posted in the corridor; many more are on Neilsen's office wall. Department managers get score sheets tailored to their own numbers. Employees get summaries at plantwide "coffee talks" every two weeks. The sheets are laid out for easy reading. "We wanted to design each one so that if somebody spends only 20 seconds with it, they'll get the essence," Neilsen says.
A sense of responsibility for making the numbers turn out right permeates NMI because of Neilsen's "thumbprints of ownership," which he builds into the scoreboards. Early every September, the company begins an arduous two-month process aimed at creating the budget--essentially, a highly detailed projected income statement--for the next fiscal year. The budget becomes the basis for the plan number on the scoreboards--the number with which actuals will be compared every month. The process itself gives new meaning to the phrase employee involvement. "Tom sets up small groups of people to gather information and participate," explains Charles Hopewell, NMI vice-president and general manager, pulling out a multipage schedule for last fall's series of meetings. "Let me show you a quick example. Here's a subgroup for materials. Our primary point person for that line item is Dave Fitzgerald, our maintenance supervisor. The secondary person is Scott Wallace, our technology manager." Every line item and sub-line item on Hopewell's schedule has a couple of names attached. Perhaps 50 of the company's 200 employees are actively involved in producing the budget.
What happens, says Neilsen, is that everyone involved in creating a number feels a degree of ownership toward that number--and a responsibility to keep it in line. An order of welding tips is wrong? "In the past we'd have said, 'We might need those tips someday, so we'll just hold on to them.' But the guy who was monitoring the budget said, 'No, those would be dollars that we're not really utilizing. We're going to send those back and get the right ones." From month to month, Neilsen's managers use the scoreboard not just to evaluate their performance but also to forecast 60 days out--and to take whatever steps are needed if the forecast isn't jibing with the plan.
In the end, of course--as the NMI experience illustrates--scoreboards are no more than a tool for encouraging good business practices like goal setting, budgeting, performance management, mutual accountability, and the employees' understanding of how they can move the numbers along, as well as their involvement in doing so. The tool's appeal is that it can start so simply--a pink flamingo with two numbers--and evolve rapidly as companies learn to do more and more with it. Not many management techniques these days are quick, cheap, effective in boosting performance, and capable of growing as a company grows. Scoreboards fit that demanding bill.
John Case, a contributing editor at Inc., is the author of The Open-Book Experience (Addison-Wesley, 1998) and the editor of the newsletter "Open-Book Management Bulletin."
