Managerial decision-making is most effectively shaped when it is integrated with how performance is measured. The challenge is that accounting-driven myopia, combined with a weak understanding of the principles of value creation by decision-makers, distorts this process. We measure the value created by underlying operations, and identify both the ongoing interplay and stressors between operating performance and investment intensity.

Our performance measurement system draws upon the existing accounting system but is mathematically consistent with the underpinning guiding principles of the Value-Based Management. We determine your cost of capital, and employ it to make performance measurement truly accountable for the use of investors’ capital in the balance sheet.

A line item by line item calculation of true capital costs, identification of productivity factors, and understanding of the true costs of operating and strategic actions, and their impact upon value creation, will open eyes and uncover new opportunities.

Better decisions stem from a greater understanding of underlying economics. Value-Based Analysis and Benchmarking, defined EP Measurement, playing-out of valuation scenarios with corresponding performance implications, identification of the Value Drivers and a more enlightened and comprehensive perspective reveal dramatic opportunities for value enhancement.

Triggered by new insights, an interactive dialogue with senior management sets in motion initiatives to extract low-hanging fruit. Going beyond immediate short-term success, the Value-Based approach is a solid foundation to coherently develop longer-term business strategies tied to financial economics and the principles of value creation.

We’ll arm you with a customized suite of simple decision tools for operating managers, help them internalize Value-Based thinking into their day-to-day decision-making, and do it without burdening them with unnecessary financial complexity.

We then train them to learn to use the tools, to understand and properly assess what they reveal and can help them to accomplish. To do this, our process is again measured and comprehensive. We educate them to not simply the numbers, but the larger significance of the underlying assumptions and the drivers themselves.

While proposing an organizational cultural shift tying everyone to value creation, we won’t introduce process improvements, necessary adjustments or enhancements in a vacuum. Essential is enterprise-wide acceptance, from operations to strategic planning, sales and marketing to production. We help build total organizational consensus.

For this reason, our training program is comprehensive, focusing on Economic Profit and its relationship to accounting and shareholder value, EP performance of the company and its business units, the Value Drivers and the cost of capital, operating strategies, capital budgeting and acquisition analysis. And ultimately including the design of an incentive-based compensation plan that builds commitment and yields better overall performance.

The importance of training and tools – for managers and corporate staff – cannot be overstated. Beyond senior executives, our commitment is training for finance, accounting, and planning staff. The result is continuity and value focus, yielding better, more profitable decisions and a steady cultural transformation with clear and tangible operational benefit.

Correctly conceived, incentive compensation reinforces, enhances and fuels the overall transformation. This is not a new plan to replace the old, but a strategic solution that aligns managers to shareholders. Our incentive compensation approach rectifies fundamental misalignments that result from the wrong metrics, overly subjective short-term views, and budgeting in perpetual conflict with target-setting. We construct the program after rigorous simulations, designed to withstand a wide spectrum of performance scenarios.

The benefits are game-changing, unleash potential and drive sustainable value creation.

Arbitrary decisions are replaced by smarter, strategic decisions, and managers become truly dedicated and committed with a new broad-based understanding of the Big Picture.