However, financial measures tend to be
lagging indicators of the strategy. Firms monitor nonfinancial measures to
understand whether they are building or destroying their capabilities—with
customers, processes, employees, and systems—for future growth and
profitability. Key nonfinancial measures are leading indicators of financial
performance, in the sense that improvements in these indicators should lead to
better financial performance in the future, while decreases in the nonfinancial
indicators (such as customer satisfaction and loyalty, process quality, and
employee motivation) generally predict decreased future financial
performance
Balanced Scorecard is a systematic approach to performance measurement
that translates an organization’s strategy into clear objectives, measures, and
targets. The Balanced Scorecard integrates an…