A performance scorecard is a graphical representation of the progress over time of some entity, such as an enterprise, an employee or a business unit, toward some specified goal or goals. Performance scorecards are widely used in many industries throughout both the public and private sectors. The performance scorecard is an essential component of the balanced scorecard methodology.
Performance scorecards are also used independently of the balanced scorecard methodology to monitor the progress of any organizational goal. The integral concepts of scorecards are targets and key performance indicators (KPIs). KPIs are metrics used to evaluate factors that are crucial to the success of an organization; targets are specific goals for those indicators.
KPIs differ from one organization to another. Net revenue is a typical enterprise KPI; unemployment rate is a typical government KPI. In the scorecard, KPIs are represented by icons. For example, the vice president of manufacturing might be interested in such items as:
- The number of units produced
- The number items that fail quality control
- The amount of byproduct generated
- Inventory levels
- Raw materials inventory levels
- The current price of raw materials
Each KPI is typically displayed as a symbol indicating the health of that particular number. For example, the number of items failing quality control might be 50. If the company is making two million items a day, this is a low percentage and might be acceptable. If, on the other hand, the company is producing only 75 expensive products a day, 50 failed products probably indicate a serious issue that must be addressed. A KPI icon may use colored indicators (green/yellow/red), smiley faces, gauges, dials, and so forth. This way, at a glance, an individual can determine whether things are good for each particular KPI without having to see the exact number or translate a number into an indicator of overall health.
Here's one example of a scorecard created in Microsoft PerformancePoint Server:
The performance scorecard is often confused with the dashboard. The main difference between the two is that a dashboard, like the dashboard of a car, indicates the status at a specific point in time; a scorecard, on the other hand, displays progress over time.
Performance scorecards are often said to be a visual answer to the question, "How are we doing?"