【正文】 alue Hierarchy of Tradeoffs Dimensions of Value Shareholder Value Creation Performance measures and targets are customized to capture short term tradeoffs in view of long term value Shortterm Tradeoffs Longterm Investments Capital Investment for long term growth potential Shortterm Returns: Returns in excess of cost of capital ? RONA ? EP spread (%) ? CFROI ? ROE Shortterm Growth: ? Net Ine growth ? Cash Flow growth ? Sales Growth Dividends Free Cash Flow Industry Factors: Not pany specific ? Macroeconomic factors ? Demographics ? Commodity prices, etc Internal Company specific (Customized metrics including EP, CVA, CFROI, TBR, and other value drivers) External Industry specific Shortterm Tradeoffs What metrics do we subscribe to? Shareholder Value Enhancement Imperatives ? Identification of value centers within the anization ? Evaluation of strategic alternatives (harvesting, divesting, acquisitions, market entry, etc.) based on value creation ? Integration of management systems (strategic planning, budgeting, resource allocation and performance measurement) based on value creation ? Implementation of MIS to facilitate operational decision making, periodic reporting and monitoring of value creation ? Rewards aligned with “value based” performance Generic Value Driver Tree Commitment Competencies Capabilities Implementation Through People Financial Results Operational Outes Structures, processes, and experiences that enable your anization to secure petitive advantage Capabilities Performance behaviors that are observable, measurable, and critical to successful performance Competencies Factors that facilitate employee mitment to the anization Commitment Balanced Measures Example Financial ? Margins ? Cost Reduction ? Project Profitability Client ? Client Satisfaction ? Perceived Value of Service Operational ? Ontime Completion Rates ? Bidding Success Rates Employee ? Employee Survey Results ? Turnover Rates EVA Pricing ? Fixed Cost Contracts ? Cost Plus Contracts ? Currency Exposure Market Position ? Competitive Differentiation ? Perceived Value of Service ? Customer Relationships ? Sales Force Effectiveness Project Load ? Industry Sector ? Geographic Peration ? Bidding Success Rates ? New Orders and Order Backlog — Funded — Nonfunded Profit Margin ? EBITDA/ Revenues ? Net Ine/ Revenues Turnover ? Revenues/ Investments Overhead/Expense Mgmt. ? Marketing/Administrative ? Accounts Receivable ? Current Liabilities ? Fixed Capital ? Use of Debt Leverage ? Investor Relations ? Analyst Coverage Growth ? Revenues Cost of Capital ? Financial Liquidity ? Capital Accessibility ? Market Alternative Returns ? Return on Total Capital (ROTC) ? Return on Gross Investment (ROGI) Return on Investment ? Strategic Alliance/Joint Ventures ? Market Focus ? Investment Capital — Branch Office — Project Working Capital — Business Dev. Costs Service Delivery Project Execution ? Overall Contract Management ? Technological Capabilities ? Subcontractor Mgmt. Operating Leverage ? Labor Productivity Business Processes Translating Value into Management Systems Contents HR Reinforces ? Analyze critical value drivers ? Review performance metrics ? Align performance metrics to objectives ? Realign Business Processes — Target setting — Planning — Budgeting — Resource allocation — Reporting — Performance assessment ? Align business unitspecific processes ? Align decision making processes based on value priorities ? Communicate to investors Gain Commitment Value Driver Analysis Reinforcement Business Process Alignment “ Push Down” ? Implement on corporate and business unit level ? Communicate valuedriven decisions ? Educate, inform, and reinforce ? Senior level executive mitment ? Broad operational buyin ? Communication of philosophy and general strategic objectives ? Broad educational initiative for managers ? Alignment of munication ? Alignment of performance criteria ? Input for ease of implementation ? HRalignment of all functions, especially incentive design and performance management ? Sharing the “Learnings” ? Communication ? Business unitspecific alignment of HR programs ? Broad educational effort for all employees ? Further HRsystems alignment The HRfunction can significantly contribute to the success of the implementation ValueCreating Behaviors, Ownership culture, Priorities, Decisions, and Measurement Linking Organizational Systems to Value Drivers has Multipoint Linkages VBMAligned Management Processes and Structure Corporate Culture VBMAlignment Desired ValueCreating Behaviors and Competencies HR Policies and Management Employment Relationships (“What’s the deal?”) Organization An Aligned Organizational Strategy will have an Impact on Business Value Drivers Financial Value Drivers Organizational Impact Leadership Staffing Rewards Organization Effectiveness Performance VBM Alignment Development Increased market share Revenue growth Profit margins Asset turnover Debt/ equity ratio Risk profile Business expansion Improved petitiveness Operational efficiency Organizational effectiveness Optimal capital structure Growth Returns Cost of Capital Value drivers Leadership is responsible for the expected behavioral changes Critical Questions that Link Management Systems