The balanced scorecard is an approach that translates the strategic mission of an organisation into functional objectives. Key performance indicators (KPI’s) are developed for each function to ensure they support the corporate objectives and strategy. KPI’s are identified from a number of perspectives as illustrated in Figure 4:
Figure 4: The Perspectives of a Balanced Scorecard
As explained in the video below, the financial perspective is concerned with meeting financial targets and improving profits. The customer perspective is designed to improve customer relationships by using a better process to keep existing customers and gaining new ones. The internal perspective is to develop new ideas to improve competitiveness. The innovation and learning perspective ensures ideas are generated and employees are appropriately trained.