Accounting Business Reporting for Decision Making

CHAPTER 14 Performance measurement 565

How do we look

to shareholders?

Financial perspective

GOALS MEASURES

Customer perspective

GOALS MEASURES

Innovation and

learning perspective

GOALS MEASURES

Internal

business perspective

GOALS MEASURES

How do

customers

see us?

Can we continue

to improve and

create value?

What must

we excel at?

FIGU R E 14.1 The balanced scorecard framework

Source: Kaplan, RS & Norton, DP 1992, ‘The balanced scorecard: measures that drive performance’, Harvard Business Review,
Jan–Feb, p. 72.

The balanced scorecard framework implies that traditional financial performance measures are inad-

equate to capture the entire performance of the entity alone. There is a need to include both short-term

and long-term measures, as well as financial and non-financial measures. This is made clear by Kaplan

and Norton (1992, p. 72), who compare the balanced scorecard to:

the dials and indicators in an airplane cockpit. For the complex task of navigating and flying an airplane,

pilots need detailed information about many aspects of the flight. They need information on fuel, air

speed, altitude, bearing, destination, and other indicators that summarize the current and predicted

environment. Reliance on one instrument can be fatal.