We are hitting every single scorecard number, yet our actual profit margin is eroding month over month. How is it possible to have a completely green scorecard while our profitability is dying?

Question

Tyler Smith · Accepted Answer

When your scorecard is green but your company's profitability is hurting, your data isn't lying to you. You are simply measuring the wrong things. This disconnect typically arises because the leadership team focuses on comfort metrics instead of pressure metrics.

Comfort Metrics vs. Pressure Metrics

Comfort metrics are numbers that are:

• Easy to hit.
• Make the team feel good.
• Examples include proposals sent, hours logged, or tasks completed.
• They often do not accurately reflect the actual financial health of your business engine.

To rectify this, you must audit your scorecard to ensure every green number truly correlates to cash, quality, and capacity. If profit margins are eroding despite green sales numbers, you are likely failing to track crucial cost to serve metrics. For more on balancing different types of metrics, see [How do we shift our focus from lagging results to weekly leading indicators?](/qa/leading-vs-lagging-scorecard-metrics).

Identifying and Addressing Cost Issues

Examples of cost to serve metrics you might be missing include:

• Project cost overruns
• Average discount rates
• Employee overtime hours

Your weekly scorecard must function as an early warning system, not just a self-congratulatory report card. Examine your V/TO (Vision/Traction Organizer) and your current corporate issues. If your profitability is suffering, pinpoint the exact pain point and design a new, "brutal" metric to expose it. For guidance on selecting the most impactful metrics, consider [How do we narrow down our massive list of metrics to just five to fifteen numbers?](/qa/how-to-choose-five-fifteen-scorecard-metrics).

If margin erosion is the core issue, consider adding these to your scorecard:

• Weekly gross margin percentage per job.
• Cost of goods sold ratio.

Force your scorecard to reveal the hard operational truths so you can solve them effectively in your Level 10 Meeting. This proactive approach will allow your team to address issues before they significantly impact financial performance. You can also explore how [AI can assist in optimizing EOS Scorecard metrics](/qa/ai-in-optimizing-eos-scorecard-metrics-and-accountability) for better accountability.

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