【正文】 gement to Business Results 1980 1990 VBM Compensation Client Projectsexamples ?Van Dorn ?Mattel ?Pacific Telesis (w/ Marakon) ?US West Relative TRS Long Term Incentive plan (first of its kind in 1983) Research on Pay Performance relationship and value metrics。o Paulo Santo Domingo Tampa The Woodlands Toronto Vancouver Washington, . (Consulting) Washington, . (Research) Los Angeles Mexico City McLean Milwaukee Minneapolis Montr233。Value Based Management Hewitt Associates August 2023 Creating Shareholder Value is Gaining Importance Due to a Variety of Factors Regional/Capital Markets Perspective Greater Focus on Shareholder Value Integration of Organizational Structures Deregulation Privatization Integration of Capital Markets WTO Capital Market Investment Objectives Mergers and Acquisitions Globalization Corporate Specific/Top Management Perspective Traditional accounting measures are not reliably linked to shareholder value Growing recognition of the need to align management actions and rewards to longterm value creation Increasing publicity of shareholder value creation rankings (., FT. Fortune) Possibility of takeover by investors seeking “under” managed assets “ Buy in” by Corporate leaders What is Value Based Management ? ? A consistent framework that aligns management action and strategic objectives with shareholder value creation ? The primary goal of value based management is to build a corporate mindset in which management decision making and execution are focused on the creation of shareholder value VBM Enables ? A consistent approach to management planning, resource allocation, performance assessment, and munication ? Management to focus and prioritize on “value” ? Alignment of management action with strategic objectives and shareholder value VBM is Not ? Solely a question of choosing a performance metric ? Limited to implementation within the corporate planning and finance division ? Easy to implement HR Alignment Facilitates the Success of VBM Implementation % % % % % % 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 5year Average % TSR CFROI Sales Growth Companies aligned to VBM objectives Companies not aligned ? VBM measures used for planning and pensation ? VBM goal setting ? Performance system ? Training ? Business unit and corporate incentives Empirical Results Show a Link Between Organizational Implementation and Value Creation Companies with business unit specific longterm incentives tied to shareholder value creation outperform panies without these incentives Companies with Corporate and Business unit incentives Companies with solely Corporate VBM incentives 3year TSR% 20 21 22 23 24 25 26 19972023 199497 199194 ValueCreating Behaviors, Priorities, Decisions, and Measurement Linking HR to VBM VBMAligned Management Processes Corporate Structure Alignment Corporate Culture VBMAlignment Desired ValueCreating Behaviors and Competencies Employment Relationship Personal Needs, Goals, and Strategies Individual Priorities and Skills HR Policies and Management Personal Vision Organization People Requirements “ Ownership” Culture ? Decisionmaking ? Priorities ? Reports An HR Perspective on Value Management Investor Scorecard Total Shareholder Return (TSR) Market Value Added (MVA) Management Track Record Growth / Return Profile Business Strategy Investments in Future Growth Economic Value Improvement Intellectual Capital Investor Expectations of future earnings risk Financial Performance Objectives Client Satisfaction Indicators Employee Engagement Productivity Product Offering Innovation People Strategy SHORT TERM INDICATORS (Illustrative) Decision Process and Organizational Structure Performance Management and Incentives Internal Resource Allocation Staffing and Recruitment Values and Culture Communications Training Internal Process “Alignment to Value” Internal Scorecard Long Term Goals and performance targets anchored to Investor Expectations What is Value in the Business Context? Time Today Business Value: What future cash flows are worth today $ $ $ $ $ Competing Perspectives: ? Look back at what has happened ? Look forward at what will happen ? Spread costs smoothly over time ? Look at the timing of when cash es and goes ? Only count what can be measured ? Count everything that affects value Value Perspective Accounting Perspective Bridging the Gap Accounting Results ?Returns ?Growth ?Margins ?Market share ?Product quality Strategy ?Management team ?Plan for the future ?Innovation ?Competitive position/investment Market Valuation ?Stock Price ?Total Shareholder Return (TSR) Expectations of Value ?Likelihood of success ?Degree of improvement ?Economic environment Measurement of Value ? Measurement of value is not a neutral act it is a choice which signifies management’s priorities and dictates the anization’s view of itself ? Selecting a performance measure aligned with enhancement of value influences not only that measure but also all those measures not selected Measurement of Value ? Return on Equity (ROE) ? Return on Assets (ROA) ? Return on Capital (ROC) ? Return on Net Assets (RONA) Return Measures ? Revenue growth ? Asset growth ? Investment growth ? Market share ? Volume Growth Measures ? Total Shareholder Return ? Market Value Added (MVA) ? Economic Value Added (EVA) ? Cash Value Added (CVA) ? Cash Flow Retur