Understanding Scorecards

A scorecard is a hierarchically related set of objectives that must be met to achieve an overall goal. These objectives are compared to established targets to monitor progress and identify potential obstacles. Scorecards are based on a strategy tree, which depicts the hierarchical structure of your objectives (the strategy components of the scorecard) from vision to strategic thrusts (STs ) to critical success factors (CSFs). The rule for how each component is scored is defined by its assigned assessment method. Key performance indicators (KPIs) are associated with scorecard components. The KPI results are evaluated to determine assessments, but KPIs are not part of the strategy tree. KPIs are associated with strategy components on the Strategy KPIs page.

When defining a scorecard, you specify the users or roles that will use the scorecard by completing a distribution list. When you run the Scorecard Assessment process, the system automatically generates the scorecards for every user that is included on the distribution list. This enables you to generate multiple scorecards by defining a single base scorecard.

Establishing a scorecard involves several steps:

• Create a strategy tree and define its strategy components.

  You use PeopleSoft Tree Manager to define the tree, and the Strategy Component page to define each strategy component.

• Associate KPIs with strategy components.

• Define cause-and-effect relationships among strategy components.

  This is an optional step.

• Define the base scorecard.

  When you define the base, or template, scorecard, you associate the strategy tree with the scorecard, define the KPIs and dimension members to include, specify which assessments are treated as exceptions, specify the user IDs or roles for which to generate scorecards, and optionally identify any related KPIs.

• Generate the individual scorecards by running the Scorecard Assessment Application Engine process (BSC_ASSESS).

  The engine must be run to create each scorecard. The key fields for a scorecard include the Scorecard ID and the User ID. Each scorecard is personalized for the user for which it is generated. For each user, only the KPIs and dimension members that the user has permission to access appear in his or her personal scorecard, and assessments are determined by considering only the user's personal set of KPIs and dimension members.

These tasks are described in detail in this topic.

Using the following logic, the system automatically generates the scorecard IDs and descriptions when it runs the Scorecard Assessment process:

• To generate the scorecard IDs, the system combines the base scorecard ID with the sequence number from the distribution list.

• To generate the scorecard descriptions, the system combines the base scorecard description with either the user ID description, or for roles, the user ID description of each user who is assigned to the role ID.

• For roles, the system generates as many personal scorecards as correspond to the number of users who are assigned to the role.

  For example, if four product managers are assigned to the role Product Manager, the system generates four personal scorecards. Individuals who are granted access to the scorecard ID for the role have access to all the personal scorecards that are generated from the role.

For example, assume that a base scorecard is defined with the following users entered in the distribution list:

The system-generated scorecards will have the following IDs and descriptions:

The list of dimension members that are defined on the base scorecard is the complete list of KPIs and dimension members to be considered for assessments; however, when determining assessments for the generated scorecards, the system considers only the KPIs and dimension members to which an individual user has been granted access.

The strategy tree defines the hierarchical structure of the components of the scorecard. When defining a scorecard, you specify the strategy tree with which it is associated. When you use the various scorecard monitoring pages to review the progress of your strategy, you navigate through the strategy tree to view the results for each component. During the planning phases of Scorecard implementation, the appropriate members of an organization should meet to define the strategic goals and to sketch the scorecards that they plan to implement. These diagrams serve as the templates for the strategy trees that you create.

See PeopleTools: PeopleSoft Tree Manager

Three delivered sample trees exist in the SHARE SetID that you can review as examples. They are:

• COMPANY_STRATEGY

• DEPT_STRATEGY

• GLOBAL_BUS_INTL

Here is the COMPANY_STRATEGY tree with all of its nodes expanded:

Image: COMPANY_STRATEGY tree

COMPANY_STRATEGY tree

When planning your scorecard, if you intend to strictly follow balanced scorecard theory standards, your strategy should be balanced across at least these four perspectives (you can also add other perspectives, if needed):

• Financial

• Customer

• Internal

• Learning

When you create your strategy tree, these perspectives typically correspond to the strategic thrust nodes that you create. CSFs are the child nodes beneath strategic thrusts. So the levels on the tree correspond to vision, strategic thrust, and CSF.

KPIs are not attached as nodes to the tree. You associate KPIs with their components using the Strategy KPIs page. As you add each node, the system displays the Strategy Component page, on which you enter details for that component.

Strategy Tree Guidelines

You must follow these rules that are specific to strategy trees:

• A specific KPI can be used only once on a scorecard.

• The component with which a KPI is associated must be at the lowest level node on the strategy tree.

  Whether that node is a critical success factor or strategic thrust doesn't matter, but it must be the lowest level node on that particular branch of the tree. For example, in the following diagram KPI_1, KPI_2, and KPI_3 are valid. If you associate a KPI with ST2, it would be ignored during assessment because the component it is attached to (ST2) has a component that is subordinate to it (CSF1):

Image: KPI association requirements

KPI association requirements

The system provides a query that audits this situation, the Strategy Trees with Non-Terminal KPIs query.

See Viewing Predefined Queries for Scorecards and KPIs.

The assessment method controls how the system determines the score of a component. When you define a strategy component, you assign it an assessment method. Four assessment methods are available:

• Best case

• Worst case

• Most frequent

• Weighting

During scorecard assessment processing, assessment takes place starting at the lowest level of the strategy tree, then moves up the tree to score the components at each level. The system considers only the directly subordinate level when it determines the score for a given strategy component. Critical success factors are assessed first, then strategic thrusts, and finally, vision.

This table describes each assessment method and explains how it determines the resulting score for a component:

For example, consider the CSF Broaden Sales Opportunities, for which subordinate KPI dimension members have received the assessments listed in this table:

The assessment results for Broaden Sales Opportunities, depending on the assessment method that is used, are listed here. For this example, assume that the Tie Breaker field is set to Worst Case.