7 Essential Metrics for Your CEO Scorecard

7 Essential Metrics for Your CEO Scorecard

Recently, I was coaching a group of larger ($1+ billion in AUM) advisory firm CEOs. Our objective was to develop a CEO scorecard they could all commit to holding themselves accountable to. Something that would measure their performance, align it with the firm’s strategic goals and objectives, and provide a roadmap to help their leadership teams better understand where they plan to focus their ongoing efforts in contributing to the business.

The following scorecard prototype is the output from that session. I encourage you to adapt and modify it for your own personal use:

Financial Performance

• Revenue Growth: Compare current firm revenue to previous periods and set growth targets. Individually consider organic growth, inorganic growth, and M&A, and assess their cumulative impact on overall revenue.
• Profit Margin: Measure net profit margin and track improvements. Historically, industry benchmarks suggest a target of between 30-40% for top-performing firms.
• Cash Flow: Ensure positive cash flow and efficient working capital management.
• Return on Investment: Evaluate ROI for all major initiatives and investments.
• Enterprise Value: Identify areas of financial focus to drive future growth in the firm's value.

Strategic Leadership

• Vision and Strategy: Assess your success in co-creating the firm's vision and strategic plan with your leadership team and your ability to communicate and execute on them.
• Market Expansion: Monitor your firm’s efforts to enter new markets and diversify revenue sources.
• Innovation: Measure your success in developing and implementing new/innovative strategies.
• Risk Management: Evaluate the handling of potential risks and contingencies (e.g., compliance, cyber threats, succession, and continuity planning).

Operational Excellence

• Cost Control: Evaluate cost-saving measures and operating efficiency. While challenges such as inflationary pressures and rising labor costs are controllable, it’s the things you can’t see (e.g., ‘service creep’) that often drive margin compression. Devoting too much time to the wrong clients can be costly.
• Advice and Guidance QC: Vigilantly monitor product/service quality and regularly gauge client satisfaction.
• Employee Engagement: Assess employee satisfaction, retention rates, and workplace culture.

Stakeholder Relations

• Shareholder Value: Measure the CEO's ability to create shareholder value and stock performance.
• Client Relations: Track client loyalty. Who are your firm’s loyal client advocates? What’s the total relationship value (TRV) of those advocates? (TRV = revenue generated directly from the client + revenue of all relationships they’ve referred.)
• Investor Relations: Assess the frequency and utility of communicating with investors and stakeholders.
• Community Impact: Evaluate corporate social responsibility efforts and community engagement.
• Advisory or Fiduciary Board Relations: How can you build better relationships, learn more from individual board members, and meet or exceed the board’s expectations?

Personal Development

• Leadership Development: Monitor your commitment to personal growth and leadership development. What are your personal developmental goals for the year?
• Ethical Conduct: Ensure adherence to ethical standards and corporate governance principles.
• Communication Skills: Assess your ability to communicate more effectively.

Adaptability & Crisis Management

• Crisis Response: Evaluate how you have managed past crises and/or unforeseen challenges (e.g., COVID). Did you conduct an after-action report with recommended remediations?
• Market Trends: Measure your ability to adapt to changing market conditions and emerging trends (e.g., AI, intergenerational wealth transfer, distributed workforce, etc.)

Long-Term Sustainability

• Team Development: Assess your ability to attract, retain and cultivate next generation professionals.
• Future Partners/Owners: Do you have clearly defined performance metrics and career tracks established for a passage to partnership?
• Succession Planning: Evaluate the CEO's receptivity to and involvement in planning for a leadership succession.

For each of the above scorecard areas, ensure your objectives and key results (OKRs) are defined with specific, measurable targets. To conduct a comprehensive evaluation, strive to create a balanced set of metrics covering the financial and non-financial aspects of the CEO’s role.

Review your targets periodically (ideally each quarter) to assess the CEO’s performance. Engage the firm’s Board (or governance body) to use the scorecard when reviewing and discussing the CEO’s performance to make more informed decisions about leadership.

Coaching Questions From This Blog:

• What are your key areas of personal leadership development for this year?
• Which individuals or areas of the firm most need your attention and effort in developing over the coming year?
• What doors could you open for others right now? Over the course of this year?
• What would you include from this sample scorecard and what would you add/edit when building your own CEO Scorecard?