Introduction
- Traditional performance measurement metrics over emphasize financial KPIs to the detriment of other key considerations, which are important from strategic and sustainability perspective.
- In addition to the financial aspects, balanced scorecard considers three key important considerations i.e. internal business processes, learning and growth and customer.
Key tenants of balanced scorecard
- Key perspectives of balanced scorecard and how KPIs are defined in each are stated below.
- Financial: To succeed financially, how should we appear to our investment stakeholders (equity or debt)
- Objectives
- Measures
- Targets
- Initiatives
- Internal business process: To satisfy business objectives what internal business processes must the entity excel at
- Objectives
- Measures
- Targets
- Initiatives
- Learning and growth: Aligned with entity’s vision and plans, what learning and growth interventions should be pursued, which will ensure sustainability and gradual improvement.
- Objectives
- Measures
- Targets
- Initiatives
- Customers: How should a company be perceived by it’s customers
- Objectives
- Measures
- Targets
- Initiatives
Typical workflow in setting balanced scorecard
An over simplified workflow to understand the process of setting balanced scorecard is stated below
