Although all KPIs are metrics, not every metric becomes a KPI. To become a KPI, a metric must have strategic importance, directly affect key aspects of the company's business, and be an important indicator of performance.
Traffic light scorecards display both metrics and KPIs, but the emphasis is on KPIs, since they are critical for assessing the success of strategic objectives.
Why "traffic light" scorecards?
The name comes from the visual display method: color coding (green, yellow, red) lets you quickly understand the current state of processes.
- Green signals that targets have been met.
- Yellow indicates possible deterioration and calls for close monitoring.
- Red warns of a critical deviation and the need for urgent action.
This display helps managers immediately see where resources should go to correct the situation. The approach suits both strategic management based on the Balanced Scorecard and the operational monitoring typical of the SLM dashboards.
How do traffic light scorecards work?
Working with traffic light scorecards involves several main steps:
- Defining goals for monitored objects: for example, task completion speed, employee performance, or SLA compliance for services.
- Setting metrics and KPIs: you can set specific metrics for each object, for example, average response time and the percentage of SLA breaches for the support team.
- Setting KPI thresholds (green, yellow, red): this lets the system clearly display the status of each object, whether it is a process, a service, or an employee.
- Aggregating data in a visual dashboard: all indicators are collected and presented in a single interactive interface, giving instant access to key data.
Traffic light scorecards aggregate data automatically, reducing the effort spent on analysis and making it easier to keep things under control.
Example: quality control in ITSM
To track the target level of service quality and the performance of support agents in ITSM, you can set KPIs such as:
- Average incident resolution time: you set acceptable values (green zone) and limit deviations (yellow and red zones) at which the work needs to be adjusted.
- Percentage of incidents with SLA breaches: if the SLA is met in 95% of cases or more, that is the green zone. If breaches exceed 10%, the red zone is triggered; anything in between is yellow.
- Percentage of incidents resolved on first contact: 75% or more is the green zone; between 60% and 75% is the yellow zone that requires attention; below 60% is red.
Color coding helps teams and managers monitor the state of processes and make the necessary changes quickly, using drill-down to get to the specific record (task).
Main stages of implementing traffic light scorecards
- Defining goals
Goals are clearly formulated, for example, improving service quality or employee performance. - Identifying critical success factors (CSFs)
Key factors that directly affect achieving the goals are identified (for example, incident response speed or equipment performance). - Choosing metrics and measurement tools
Metrics that measure the CSFs are selected, along with tools to monitor them. Measurable and accurate parameters matter, for example, average incident resolution time or SLA compliance percentage. - Building a KPI system
KPIs with target and threshold values are developed based on the metrics, so it is clear when performance is within the norm and when intervention is needed. - Aggregating data
Data for all metrics is aggregated and visualized in traffic light scorecards. Color coding (green, yellow, red) lets you see the current state of processes at a glance and track deviations from planned values.
