THE XQ Scorecard
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By Edward D. Hess,
Distinguished Executive in Residence and
Adjunct Professor of Management, Goizueta Graduate School of Business
Managing a business so it continually improves and grows is hard - in fact, very hard. Prerequisites to that result are the business builder's passion, determination and perseverance. Additionally, you must produce a product or service which meets customers' needs at a fair price. But just as critical is the concept of leverage. A business builder must leverage himself or herself through others. It is only through the effective leveraging of yourself through your employees that you can create value. A business builder must instill his or her employees with values and standards so they will do what you want, when you want, and how you want just as if you would - many times a day - every day.
A business builder is like a football coach. A coach gets results through a team. A coach determines the game strategy, designs and teaches the team the plays, teaches each player his assignment, critiques and grades the players' performance, and adjusts the plays based on feedback.
You, the business builder, have the same responsibilities as a coach; you set the strategy, you design the product or service to meet certain needs, you teach your employees their assignments, you measure the results, and you adjust to customer and competition feedback. This analogy breaks down when you look at the fact that football teams practice, review films and critique their performance four days a week and only play one game a week. You have to play the business game every day, six days a week. And you have to simultaneously lead, teach, critique, and adapt every day.
It is this simultaneous execution of teaching, critiquing, and adapting that is the challenge for a growing business, and the fact is that you have to do it day in and day out. Big businesses have the structure, management depth, and organization which allows them to separate the training from the execution and to separate the grading and measuring from both the training and execution. Most growing private companies do not have this luxury.
What I have learned from working with business builders and from building businesses and teams over 30 years is that many forget the following three basic principles:
The devil is in the details - what you measure. I advocate measuring behaviors which lead to results, not the end results. In my last business, I was able to double productivity by using this approach - drilling down into each step of the process until I got to the key behaviors I wanted to measure and reward. Unfortunately, most people measure financial or customer satisfaction conclusions and not specific desired employee behaviors which will lead to those results.
- Employees will do what you measure;
- Employees will do what you measure better if you also reward it and;
- The purpose of management is to manage the details of what you measure.
Identifying and measuring behaviors requires you and each employee or team to focus on the details of execution - what they will do every day to best carry out their assignments. Moreover, it gives you the opportunity through this process to teach and leverage your standards on their performance. Managing through an XQ Scorecard is the way you tell each person or team what you want them to do, how you want them to do it, and why doing it that way is important.
An XQ Scorecard can be the method by which you simultaneously teach, measure, critique, improve and reward performance on a continual basis. It allows you to maximize your managerial efficiency by making teaching, measuring and improving part of one continual and simultaneous process that can be imprinted by its repetitive use. It is a tool which allows you to measure performance often and focus on key employee performance frequently. This tool prioritizes what is important for the employees and focuses their behavior daily.
The key to using XQ is to think deeply about what behaviors you want to encourage - behaviors, not end results.
The XQ Scorecard for each employee should specifically identify the key "blocking and tackling" assignments for each player. This implies that if you do these acts, you will produce the desired results. So you must figure out what core, fundamental behaviors you want to measure and reward. By drilling down to the basic behavior level with your employees, you will teach employees what to do and why they should do it; you are linking daily behavior to the big results and you are focusing your employees on what is important for the success of your business.
Not surprisingly, there is no off-the-shelf, one-size-fits-all XQ Scorecard. Most scorecards measure conclusions. Moreover, the behaviors you choose to measure will change as your employees improve and will depend upon:
Using a sales person or business developer as an example, what behaviors should we measure? What are the critical foundations for sales performance? What are the behavioral building blocks? Closed sales result from need-responsive sales pitches being made by the right people to the right targets. Targeted sales pitches result from targeted sales calls being made in a way which gathers or collects (1) the key information about the customer's needs (2) the customer's ability and willingness to pay for the meeting of those needs and (3) the customer's willingness to switch to either your better or cheaper product.
- The maturity and size of your business;
- Whether you are in a high margin or low margin business; and
- What you are selling.
Targeted sales calls result from marketing research which finds the potential customers who may need your product or service. Market research depends on the value attributes of your product or service and understanding why someone will switch to your product. All through this process, we want to measure target feedback, pitch feedback, and customer feedback so we can improve our product, improve our marketing and sales productivity.
Just as importantly, we need to impose a sense of urgency.
So maybe we would measure:
Taking all this into account, a suggested XQ Scorecard for a salesperson could look like this:
- Efficiency and productivity of target market research, sales calls, and sales pitches;
- Information gathering from target marketing, sales calls, and sales pitches;
- Acting quickly; and
- Acting in a way to create positive customer response.
What am I trying to measure? How efficiently we are working, feedback generation, and quality of target generation and sales pitches. As I sit with the employee and work through what they should do and how they should do it, we are agreeing on how to carry out the assignments, agreeing on the importance of learning from our acts and being better each day; and agreeing on a pace to measure productivity. This interactive process - the blocking and tackling of business execution - is a simultaneous teaching, measurement, and critiquing tool which can be improved upon frequently to continue the getting better and faster process.
- Number of new qualified targets generated this week;
- Total number of calls to each target to produce sales call;
- Number of days from first call to sales call;
- Number of customer's need forms properly filled out after sales call;
- Number of sales calls turned into sales pitches;
- Average number of days from sales call to sales pitch;
- Number of sales pitches made? Won? Lost?
- Number of sales pitch win-lose feedback forms properly filled out;
- Average number of days from sales call to delivery of product;
- Number of customer feedback interview forms properly filled out;
- Number of days from delivery of product to cash collection;
- Number of unsolicited customer thank yous;
- Number of lost target follow-ups.
XQ Scorecard is a tool which allows you to document and grade performance and it helps you leverage your intensity, passion, and values through your team. Only through effective team building and team execution can you build a sustainable and realizable value over time.
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