Indexed Scoring vs. Absolute Scoring

For scorecard levels above KPIs, for example, objectives and perspectives, you may choose to use either indexed scoring or absolute scoring.

In most cases, indexed scoring is appropriate because it accounts for disparate scores, but if scores always fall within narrow ranges, absolute scoring may be considered appropriate. In the example below, an objective has 5 underlying KPIs with widely ranging scores:

In the example above, an average score using absolute scoring would be -9.18. The score is compared to predetermined thresholds like:

Therefore, the objective status would be Red. However, looking at the colors of the underlying KPIs, the objective color is skewed by the disparate score values of the underlying KPIs. In basic terms, absolute scoring works best when every KPI in the entire database has a score in a narrow range. Even if all of the scores were positive, a single KPI with a very high score can skew the average.

If the same KPIs were averaged with index values, the average score is more reasonable:

Average = (3 + 5 + 5 + 2 + 3)/5 = 3.6. The score is rounded to the whole number 4, so the objective status would be Green.

The same premise holds true for weighted average. Indexed scoring is more appropriate unless all the KPIs scores fall in a narrow, known range. If you use least value or greatest value, the color of the scorecard level above KPIs, for example, objectives, is set to the worst performing or best performing KPI color regardless of indexed or absolute scoring. Note that absolute scoring versus indexed scoring is a database-wide setting.