From quite some time, it has been sinking into the corporate psyche that it is not enough just to hanker after and pursue financial goals and targets. Corporate history bears vocal testimony to the fact that at the market place, it is possible to win the small battles of corporate performance and yet lose the war of long-term sustenance and endurance. There are so many examples (some recent) where the so-called true blue companies and respected corporations faltered at the altar of corporate governance and integrity even though their profits were stellar. All these facts point out for the need of applying a different set of standards and measures for companies, which is embodied by the balanced scorecard.

The balance scorecard refers to a management principle which has its origins in performance management, and was pioneered by Dr. Robert Kaplan as well as Dr. David Norton, who wanted to evolve a holistic and comprehensive way of looking at business and measuring its efficacy. The balanced scorecard, as the name indicates, is a set of measures that every company should use to judge its effectiveness in a manner, which is balanced and not skewed towards just one set of measures. For one, the scorecard espouses the idea that a company’s vision as well as its strategy should be aligned to these measures.

The first set of measures is the financial measures that understandably define the raison d'être for the company’s existence. If a company fails financially, it would have no chance to exist or be sustained over the long term. Hence, a lot of attention is given to having the right financial measures like revenue, profitability, growth and market share, which are able indicators of how a company is faring. Closely linked to this is the second set of measures that deal with the internal business processes, which help in delivery and achievement against business goals.

The third set of measures is the all important people related measures. People are the prime movers and it is imperative for every company to ensure that this intensely important set of stakeholders is well taken care of, not only monetarily but also in terms of learning and development as well as capability enhancement. The fourth and last set of measures deals with customer satisfaction. Every business exists because it fulfils some need or the other of its customers. So, the failure to ensure customer delight can well denote the decline and demise of a company.