Balanced scorecard system has a very simple concept. Its creators, Norton and Kaplan, were the first to include nonfinancial indicators to the list of measures to be evaluated in order to assess business performance of a company. Key performance indicators (KPIs for short) are all important. It is possible to set the right goals and make the right decisions but it is not possible to achieve positive results when evaluating the wrong key performance indicators. Choice of key performance indicators predetermines overall balanced scorecard success. The history of business world knows many examples of balanced scorecard failures related to the wrong choice or the wrong evaluation of key performance indicators.
To begin with, it needs mentioning that key performance indicators are not just measures that demonstrate company progress or regress on the way to implement strategic goals. KPIs represent critical success factors in various environments the company operates in. Balanced scorecard consists of four categories: financial, customer, internal business processes, learning and growth. Logically, each category has own set of key performance indicators which are however are related to KPIs in other categories. For example, such key performance indicator as sales proposals per one customer is directly related to sales growth rate. Employee satisfaction is linked to customer satisfaction as statistics show that the most satisfied employees in the company have the most satisfied customers, i.e. those who bring the most money for the company.