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: Amongst the measures of success are:
Market share
Revenue growth
Profit ratio
Return on investment
Economic value added
Return on capital employed
Operating cost management
Operating ratios and loss ratios
Corporate goals
Survival
Profitability
Growth
Process cost savings
Increased return on assets
Profit growth
Measures
Cash flow
Net profitability ratio
Sales revenue
Growth in sales revenue
Cost reduction
ROCE
Share price
Return on shareholder funds
More on the customer perspective
How 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.
Particular areas of focus would include:
Customer service
New products
New markets
Customer retention
Customer satisfaction
What does the organisation need to do to remain that customer’s valued supplier?
Potential goals for the customer perspective could include:
Customer satisfaction
New customer acquisition
Customer retention
Customer loyalty
Fast response
Responsiveness
Efficiency
Reliability
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The following metrics could be used to measure success in relation to the customer perspective:
Customer satisfaction index
Repeat purchases
Market share
On time deliveries
Number of complaints
Average time to process orders
Returned orders
Response time
Reliability
New customer acquisitions
Perceived value for money
More on the internal perspective
This seeks to identify:
How well the business is performing.
Whether the products and services offered meet customer expectations.
The critical processes for satisfying both customers and shareholders.
Activities in which the firm excels?
And in what must it excel in the future?
The internal processes that the company must be improved if it is to achieve its objectives.
This perspective is concerned with assessing the quality of people and processes.
Potential goals for the internal perspective include:
Improve core competencies
Improvements in technology
Streamline processes
Manufacturing excellence
Quality performance
Inventory management
Quality
Motivated workforce
The following metrics could be used to measure success in relation to the internal perspective:
Efficiency improvements
Reduction in unit costs
Reduced waste
Improvements in morale
Increase in capacity utilisation
Increased productivity
% defective output
Amount of recycled waste
Amount of reworking
More on the innovation and learning perspective
This perspective is concerned with issues such as:
Can we continue to improve and create value?
In which areas must the organisation improve?
How can the company continue to improve and create value in the future?
What should it be doing to make this happen?
Potential goals for the innovation and learning perspective include:
New product development
Continuous improvement
Technological leadership
HR development
Product diversification
The following metrics could be used to measure success in relation to the innovation and learning perspective:
