Our business is highly sensitive to macroeconomic shifts and raw material price fluctuations, but we do not track these external factors weekly. Should we include external market indicators on our internal leadership Scorecard, or should we focus exclusively on internal activities?

Question

Tyler Smith · Accepted Answer

Your leadership team scorecard is designed to track internal activities that your team can directly control. Including external market indices, commodity prices, or interest rates on your scorecard is generally a mistake because your team cannot influence these numbers.

Instead of tracking the external market indicator itself, you should track your internal operational response to that indicator. This keeps the focus entirely on execution and accountability.

For example, if your business is highly sensitive to raw material price fluctuations, do not put the market price of steel on your scorecard. Instead, track these actionable internal metrics:
- Weekly percentage of client quotes adjusted to match current supplier pricing.
- Number of contract renegotiations initiated with raw material suppliers.
- Weekly inventory turnover rate to minimize holding high-cost stock.

By shifting your focus from the external factor to your team's reaction, you maintain strict accountability. Your team cannot blame the market for poor performance when your scorecard is measuring their agility and speed in responding to those market changes. This is how you run a highly adaptive organization.