EVA Challenge (Implementing Economic Value Added Transformation Program)

Author: Joel M. Sternen et al.
Translator: Zeng Rong et al.
United Kingdom / UK
Publisher:
Publish Date: 2002-01-01
Features: Economic Value Added (EVA) – is a measurement method for a company's true economic performance and a strategy to create shareholder wealth. It is also a method to change a company's advantages and behaviors across the entire company, from production lines. Properly implemented, EVA will free company performance measurement from the volatility of accounting conventions and align the interests of management with those of shareholders, ending the decades-long conflict between the two. The EVA Challenge provides valuable insights not only for beginners in EVA but also for advanced practitioners. Real-world case studies illustrate how the practical application of shareholder value positioning can align the goals of all levels of the organization, motivate management by linking compensation to EVA performance, and deliver additional value to shareholders.
Essentially, an EVA program consists of three components: a measurement system, an incentive system, and a financial management system. For example, when measuring performance, the key element of EVA is to identify the cost of capital – the capital cost of the company, department, subsidiary, or product. It demonstrates to executives worldwide how to adapt EVA to their organizational needs and enhance the economic value they create.