Our weekly Scorecard shows all green for sales volume and project delivery times, yet our company profitability is actively dropping. How do we diagnose why our Scorecard is green while our bottom line is suffering?

Question

Tyler Smith · Accepted Answer

When your weekly metrics look healthy but your financial reality is painful, you are tracking the wrong indicators. Volume and speed are vanity metrics if they come at the expense of margin. If your sales and operations are green but profit is down, you are likely growing yourself out of business by taking on bad work.

To diagnose this, look at the composition of your metrics. You are probably tracking top-line volume, such as total sales closed, without measuring margin quality. To fix this, you must replace raw volume metrics with margin-focused leading indicators.

Start tracking weekly average deal size, average gross margin percentage of closed deals, or actual versus estimated project hours. If your operations team is hitting delivery timelines by throwing expensive overtime labor at the problem, your speed metric will be green while your profitability is ruined. Tracking weekly labor efficiency or overtime hours will expose this issue immediately.

The purpose of the Scorecard is to give you an accurate pulse of the business. If the business is hurting, the Scorecard must reflect that pain. Audit your metrics during your next quarterly session and ensure you have balanced your volume indicators with efficiency and margin indicators.