The Balanced Scorecard & EVA

This paper reflects on how the EVA measures of organisational performance can be used within the Balanced Scorecard approach to strategic management.

The Balanced Scorecard & EVA

This paper reflects on how the EVA measures of organisational performance can be used within the Balanced Scorecard approach to strategic management.

One of the strengths of the Balanced Scorecard is its ability to work well in conjunction with existing management processes. Economic Value Added (EVA) is a composite measure of financial performance. EVA measures the difference between the return on a company’s capital and the cost of that capital. A positive EVA indicates that the company’s activities have generated ‘shareholder value’ over the period of measurement.

EVA has advantages over other measures of financial performance but has limitations as a measure to promote strategic alignment or drive strategy implementation. Nonetheless, we suggest that a hybrid tool combining EVA with the Balanced Scorecard would by comparison be a powerful basis for encouraging organisational change and performance improvement.

Check out our linked presentation on this topic.

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