Management of company value. part 18

Hello.

Measuring the performance of a company based on value.

Responsibility of the company management.

This material sums up the theme of the issues and problems that arise when evaluating the results of a company, if a management concept is used that focuses on the growth of the company's value. Also in this synopsis I will talk about the role of the management team in promoting this concept.

I will start with the top management of the company, with top managers responsible for non-financial management in the organization.

I will list those moments for which they must respond.

The first question will be: how are the competencies of each manager developing the analysis of components that increase the value of the company, that is, those specific components peculiar to this company, on which profitability, sales, growth of the company, and investments depend. The next question is, every manager should be aware of his role in the way in which he and his subordinate subdivision influence the growth of free money flows and the reduction of risk.

If a company uses a value-oriented management concept, then it must rebuild its corporate culture in accordance with this concept. The tasks of top management will include understanding the essence of this concept, they will have to take action to implement this new approach. It's not about calculating specific scenarios with clear figures, the emphasis is on non-financial functions of managers.

Now about the tasks that are faced by those responsible for finance in the company of top managers. These specialists have the same tasks as I listed above and also more complex tasks.

Top managers involved in finance in the company and adopting a new concept should develop their knowledge and skills in risk analysis and cost analysis.

They must be able to adapt the calculation of the return on investment for each division of the company, based on the specifics of this unit, based on the level of risks of a particular unit.

Also, financial managers will have the task of building a strategic analysis of finance, the task of developing a system of economic profit indicators and adapting this system to different units within the company.

The CFO will have the task of analyzing and summarizing information on the company's performance in a different way, the approach will differ from the traditional one. Also, you will need to change the form of management reports so that you can see how successfully the company's value increases.

What questions are facing the CEO of the company?

I will list these questions.

How consistent are the strategies that he proposes, the concept of increasing value? How much of the results, which should be controlled by the CEO, are related to the contribution to the value of the company?

What should the CEO do to ensure that the way of thinking based on the concept of increasing value is distributed among the company's employees?

If the manager is able to correctly solve these issues, he will be able to master the skill of creating value, in which there are many secrets.

Secrets of value creation also include issues of administrative routine, how to adapt the concept to the culture of the company, to the personnel of a specific company. Other secrets are related to the indicators of economic profit that are used for different parts of the company, how they are adapted to different units and their specifics.

In the next part I will talk about the role of the board of directors, how the activities of the company's board of directors are consistent with the management concept based on the growth of value.

Thank you.