Balanced scorecard - four perspectives

The four perspectives are:

Financial perspective - how does the firm look to shareholders? Customer perspective - how do customers see the firm? Internal perspective - how well does it manage its operational processes? Innovation and learning perspective can the firm continue to improve and create value? This perspective also examines how an organisation learns and grows.

For each of four perspectives it is necessary to identify indicators to measure the performance of the organisations. More on the financial perspective This is concerned with the shareholders view of performance. Shareholders are concerned with many aspects of financial performance: mongst the measures of success are:

!arket share "evenue growth #rofit ratio "eturn on investment $conomic value added "eturn on capital employed %perating cost management %perating ratios and loss ratios &orporate goals Survival #rofita'ility (rowth #rocess cost savings )ncreased return on assets #rofit growth !easures &ash flow *et profita'ility ratio Sales revenue (rowth in sales revenue &ost reduction "%&$ Share price "eturn on shareholder funds

More on the customer perspective +ow do customers perceive the firm? This focuses on the analysis of different types of customers, their degree of satisfaction and the processes used to deliver products and services to customers. #articular areas of focus would include:

&ustomer service *ew products *ew markets &ustomer retention &ustomer satisfaction -hat does the organisation need to do to remain that customer.s valued supplier?

Potential goals for the customer perspective could include:

&ustomer satisfaction *ew customer ac/uisition &ustomer retention &ustomer loyalty Fast response "esponsiveness $fficiency "elia'ility )mage

The following metrics could be used to measure success in relation to the customer perspective:

&ustomer satisfaction index "epeat purchases !arket share %n time deliveries *um'er of complaints verage time to process orders "eturned orders "esponse time "elia'ility *ew customer ac/uisitions #erceived value for money

More on the internal perspective This seeks to identify:

+ow well the 'usiness is performing. -hether the products and services offered meet customer expectations. The critical processes for satisfying 'oth customers and shareholders.

ctivities in which the firm excels? nd in what must it excel in the future? The internal processes that the company must 'e improved if it is to achieve its o'0ectives.

This perspective is concerned with assessing the /uality of people and processes. Potential goals for the internal perspective include:

)mprove core competencies )mprovements in technology Streamline processes !anufacturing excellence 1uality performance )nventory management 1uality !otivated workforce

The following metrics could be used to measure success in relation to the internal perspective:

$fficiency improvements "eduction in unit costs "educed waste )mprovements in morale )ncrease in capacity utilisation )ncreased productivity 2 defective output mount of recycled waste mount of reworking

More on the innovation and learning perspective This perspective is concerned with issues such as:

&an we continue to improve and create value? )n which areas must the organisation improve? +ow can the company continue to improve and create value in the future? -hat should it 'e doing to make this happen?

Potential goals for the innovation and learning perspective include:

*ew product development &ontinuous improvement Technological leadership +" development #roduct diversification

The following metrics could be used to measure success in relation to the innovation and learning perspective:

*um'er of new products 2 sales from new products mount of training *um'er of strategic skills learned. 3alue of new product in sales "45 as 2 of sales *um'er of employee suggestions. $xtent of employee empowerment