Robert, S., & David, P. (1992). Norton. The Balance Score Card: Measures that Drive Performance. Harvard Business Review Press, 5, 211.

The balanced scorecard merges the essential measures the executives would like to understand in the running of the organization. Executives require the general performance of the organization for strategic decision-making. The balanced scorecard measures the financial, the customer, internal business, innovation, and learning perspectives. These factors cannot provide the necessary performance information for all critical areas on the organization separately. The balanced scorecard combines the elements into one performance measurement tool. The idea is to incorporate all the essential aspects of the organization in one measure that provides the executives with relevant information for decision making. Since none of the actions can provide a clear performance target, the balanced scorecard presents a comprehensive method of measurement.

A business must measure the performance of the critical areas of business. Robert and David (1992) claim that traditional financial measures of performance cannot provide meaningful information in the current era of business. The choice of measurement systems affects employees’ behavior. Moreover, traditional measures can give misleading information about the performance of an organization. Hence, senior executives select measurement strategies that touch on all critical areas of the organization. According to Robert and David (1992), senior executives understand the impact of their performance evaluation criteria on the rest of the organization. Executives also understand the need for correct information and its role in decision-making. However, Robert and David (1992) developed a balanced scorecard to help bring together essential measures of performance. The method captures critical areas of the organization that impact decision-making. With the tool, executives can attain unambiguous information about the performance of the essential areas.

Executives combine several measures to derive meaningful information about the performance of the business. The customer perspective evaluates the goals and measures of the way customers view the organization. It measures the company’s performance in the eyes of the customers. Clients measure the performance of a company by the cost of items, time of delivery, quality of the product, and product performance and service (Robert & David, 1992). The internal business perspective evaluates the goals and measures the effectiveness of the business process concerning customer satisfaction. The internal business perspective provides a view of the operability of the methods. Customer satisfaction depends on how well the internal operations of the organization work. Innovation and learning perspective provides an understanding of the company’s capability to continue improving (Robert & David, 1992). It refers to the company’s ability to innovate and learn. The company must evaluate its ability to develop new products and to create more value for the customers. The financial perspective assesses the contribution of the company’s strategy and its execution on the performance of the bottom-line. It involves finance goals like profitability and growth.

In conclusion, the business scorecard seeks to answer the needs of executives in developing complementary measures of performance. No single measure of performance can provide adequate information about performance. Hence, managers and executives require a simplified tool that incorporates all the critical areas’ performances. The balanced scorecard integrates measures that appear disparate to provide the decision-maker with adequate information. With the balanced scorecard, the management can set and measure the generalized performance of the organization. Thus, it is a thorough and comprehensive method of measurement of performance.

References

Robert, S., & David, P. (1992). Norton. The balance scorecard: Measures that drive performance. Harvard Business Review Press, 5, 211.

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