Focusing on creating wealth for shareholders.

Value based management (VBM) can help managers make decisions in the context of the financial objectives of the company and the expectations of the shareholders. Managers need to have an understanding of their key value drivers, which can be intangible assets, the financial structure, asset turns and working capital. Each requires a different type of focus and management attention. Strategic decisions at the senior level have to be linked to the value drivers used by frontline managers and employees.

As organisations seek to involve more people in VBM approaches and ensure they are aligned to the corporate objectives, a larger scale implementation that can be updated and used more frequently will be needed. SAS software can be used to enhance the effectiveness of a VBM implementation by providing better analysis and predictive capabilities and aiding communication within the company and with external parties. SAS software can be used to implement VBM in the following ways:

• Strategy mapping: business drivers that affect shareholder value can be mapped to show the links between each and what can be done to improve them.
• Alignment: ensure the goals cascaded throughout the organisation are in line with the overall corporate objectives, and that there is top to bottom alignment of activities.
• Internal communication: the strategic vision and long term corporate goals can be shared with all employees through the Web. Performance reporting can be updated automatically and delivered to the desktop.
• Measurements: measures can be summed and amalgamated, target and actual data can be collected and reported automatically, and early indicators of variance can be displayed. Appropriate VBM drivers can be linked to each metric.
• Investor communication: disclosure of relevant information, the goal being to avoid unnecessary surprises and minimise the uncertainty. Top level views can give management an overall view of VBM performance.
• Continuous improvement: highlight key areas that need improvement through drill down and analysis, correlation of drivers with outcomes and personalised information portals.