Objective setting is not an isolated process. As has already been discussed there is a need for managers to know the key criteria by which their performance against  objectives will be measured. There is a clear link between setting objectives and the setting of performance measures. At the core of the balanced scorecard approach is the belief that managers have to be able to look at a business from four key perspectives:

• Customer perspective: How customers see a business is critical, but financial measures alone do not provide this view. Customers are generally concerned with quality, performance, service and time. For each of these categories the organization should develop objectives and performance measures. Obviously how these categories are defined has to be from the customer’s perspective. This will allow the organization to track how customers view the business overtime.

• Internal perspective: Managers have to identify the critical internal processes that will allow them to satisfy customer needs. Identifying the processes that are important to customer satisfaction allows managers to identify the functions and competencies in which they need to excel.

• Innovation and learning perspective: An organization’s ability to create value is inextricably linked to its capacity to continually improve through innovation and learning.

• Financial perspective: This allows the organization to see how the business looks from the shareholders point of view. This financial performance measures the success, not only of an organization’s strategy, but also of its implementation.

The balanced scorecard approach also addresses one other potential problem of ensuring consistency between objectives.