Why Are They Different and How to Use Them to Grow your Business
One of the essential aspects of your companies’ strategic planning process is to monitor your organization’s KPIs and progress. Although there are vast tools and means to track your success, the kind of method you use depends on the needs of your business and the timeframe. Additionally, it depends on what goals you want to achieve, as well as the metrics you are tracking.
For successful performance management, companies should develop and implement tools and techniques that guarantee accountability, feedback and proper documentation. Today, dashboards and scorecards are the two commonly utilized tools when it comes to effective execution and monitoring of strategic initiatives. Although both are excellent tools that are often used interchangeably, they are unique.
Why Scorecards and Dashboards are Different
Although scorecards and dashboards help organizations aggregate data across various units and also provide them with an opportunity to monitor performance and progress, they feature some critical distinctions. And for your organization to derive real benefits from the two business intelligence tools, it is essential that you understand these differences.
A scorecard provides a snapshot of the current performance of the organization’s strategies against set goals and objectives. The scorecard marries an enterprise’s overall vision and business strategy by monitoring significant metrics based on customer information, financial information, business processes, and desired growth. It helps you evaluate whether your efforts are succeeding or failing based on the Key Performance Indicators (KPIs) and set goals.
Scorecards are essential tools for organizations that need to manage performance and assess their strategic execution. This is because they help determine how an organization is progressing when you consider the set targets. A scorecard is the most commonly used tool when tracking KPIs as the metrics are tracked against target values. Scorecards are ideal when businesses are:
- Tracking progress based on set strategies
- Measuring team or department effectiveness
- Looking for detailed snapshots of performance reports based on target values.
A dashboard is a real-time central hub that visually tracks, analyzes and displays KPIs, key data points and metrics to monitor the health of the business, project or process. A dashboard monitors the operational performance of activities that may not necessarily relate to the strategic direction of the company. Since dashboards visualize large sets of data, they help enterprises track operational efficiency in real-time as they are regularly updated with new information.
Typically, dashboards display data in the form of line charts, tables, gauges and bar charts, but below the surface, they connect to organizational files, APIs, attachments and services. A dashboard presents a central hub where you can easily access various datasets simultaneously. It measures performance and tracks metrics without comparing them to the strategic objectives and goals.
By providing a central repository where businesses can monitor and analyze data, the dashboard reduces the number of hours you used when interpreting or combing through large datasets. It provides information that forms the foundation for better decision making and effective day-to-day management of departments, teams and expenses. More importantly, they allow businesses to view historical data when evaluating current performance. Dashboards are ideal when the organization want to:
- Track their operational performance in real-time
- Effectively manage teams, resources, and expenses on a day-to-day basis
- Use historical data to analyze or measure current performance.
“For successful performance management, companies should develop and implement tools and techniques that guarantee accountability, feedback and proper documentation.”
Differences between Scorecards and Dashboards
Scorecards track current metrics and compare them against target values. On the other hand, dashboard tracks metrics to assess real-time performance.
Since scorecards help compare current performance and set targets, it is more focused on long-term goals. Dashboards provide a more operational view of the real-time performance of the business, thus focusing more on short term goals.
Scorecards help organizations measure progress by tracking metrics and comparing them to target values. Dashboards measure performance by monitoring levels of the selected KPIs without comparing them with any set goals or objectives.
Unlike scorecards, which are generally viewed as periodic measures and usually updated at intervals (weeks or months), dashboards are real-time monitoring tools that are continuously updated.
Since dashboards primarily offer tactical decisions, they are mostly utilized by middle and low-level managers in an organization. Scorecards provide strategic information and are typically used by executive management when formulating strategies.
Which of the Two Do You Need In your Business?
The decision to use either scorecards or dashboards in your organization is not a mutually exclusive one. Using both tools in your organization can be more beneficial than just choosing one, providing a vividly clear picture of your operational efficiency and show progress towards achieving strategic and operational goals. While there is no simple formula to help you know when to use a given tool, each has its area of specialty.
If you are looking to have a concise and targeted view of a specific area in your business, a scorecard is an ideal tool. You can use it in instances, such as when you want to determine how a particular team is doing their work or how well marketing KPIs are being met. Scorecards help you determine whether the strategies in place are propelling you towards achieving your goals. They are also ideal for businesses that have a broader scope or many KPIs to monitor or analyze.
If you want to have a bird’s-eye view of your enterprise’s operations, a dashboard is the ideal tool. Since they help collect multiple datasets and reports in a central repository, dashboards help review and monitor performance daily. If you want a tool that enables you to track metrics for day-to-day operational decisions, dashboards are the best.
When organizations use both scorecards and dashboards, they can derive value from the collective data being measured and refine their strategic decision-making process. Scorecards can be incorporated in the dashboards and thus provide organizations with the opportunity to view multiple KPIs of specific areas and monitor their progress.
How Pinnacle Consulting Can Help
Strategic plans are best created by partnering with a management consultant who uses their expertise to outline your vision, mission, objectives, initiatives, and KPIs that will successfully transform your business. The first step to building your strategy plan is working with a professional who understands where you are now and where you want to be tomorrow.
Pinnacle Consulting provides strategic planning and management consulting leadership to organizations, creating efficient operations and exceptional execution, and facilitating strategic business growth. We provide:
- Business Strategy Consulting
- Measurement and Monitoring Services
- Program and Project Management Services
- Management Consulting Services
To find out more about us and how we can help your business thrive, contact us. We look forward to working with you.