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This is fairly common-sensical tip, but not a common one in occurrence. As you design your dashboards and scorecards, you will be having a mix of leading and lagging indicators. As a definition- A leading indicator helps project the future performance, whereas a lagging indicator states the past performance
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Many a times, the managers are so focused on the outcomes, that the leading indicators get sidelined. The logic is that 'we bother about the results’ and the person responsible is empowered and responsible to manage his ship to deliver the results. In other words, the reviewing manager may not have inclination or the time to look at the leading indicators and discuss/review the future performance.
This tip is to help the readers on how we can change this mind-set. The ideas are:
Idea I-Make the 'future projected performance' as mandatory component of a scorecard or a dashboard. As we have reviewed the dashboards/scorecards of our clients, we are taken aback by the fact that very few of them are reporting on the expected future performance. Most of the scorecards are focused on 'what has happened?’ few go into 'why is it happening?' and very few talk about 'what are we expecting in future?'
The caution is that this idea is easier said than done. By doing this you would place a formal responsibility on the delivering units to put their expected performance in writing. When we did it for few clients, we found that it not only get them thinking on their future projections, but also changed their view on the reasons behind their current performance. We also saw that degree of help items and support which they sought from reviewing manager went up.
Coming back to this idea- As you incorporate the expected future performance in your scorecard, you will find both the delivering and reviewing managers will start looking for the leading indicators. The reason that they will do so is to 'confirm and validate' the expressed future performance. For example- If the delivering manager is stating the future sales performance as USD X, that has to be supported by the following leading indicators:
- Sales pipeline (the sales under progress)
- The sales staff on board over last three months- Sales offices launched in last six months
Idea II- Balance goals between the lagging and leading indicators
This is again one of those revolutionary ideas (sorry!-we don't have many simple ideas for this tip), which is easier said than done. The idea is to measure the performance of the delivering manager not only on the final outcomes but also on the leading indicators, which will govern performance in future. Taking the pervious example, one can have the following weight ages applied to the sales performance goal:
- Sales Revenue achieved- 65%
- Sales Employees hired- 10%
- Sales offices opened- 10%
- Sales pipeline- 15%
Caution- You may not need to do this for all levels in your organization. For the foot soldiers, one may keep it results focused, but for business and unit managers, this approach can be adopted.
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