Increasing its value is every company's ultimate goal. However, when a company defined its value objective, is it so easy to achieve? Value Added Scorecard integrates Balanced Scorecard and Economic Value Added. It is an effective and probably the best tool for evaluating organizational performance and motivating staff. VAS aligns interests of management with those of the shareholders successfully. Through objective measurement, VAS motivates those staffs that create real values for shareholders.
VAS focuses on shareholder's value. Through maximizing shareholder's value, the organization creates the maximum benefits to the society. Therefore, VAS identifies the Economic Value Added as the organization's ultimate goal. This goal is derived from three interrelated factors: Learning and growth, internal process performance, and customer value.
In fact, traditional accounting system may not be good in representing an organization's true value. There are a lot of distortions. Some of the managers even used some techniques to erode shareholders' wealth, in order to amplify the book values. VAS lets the management to rethink the true costs of the funds and make them be more considerate in making decision of investment. Moreover, a VAS motivation system has the feature of "no ceiling", thus with indefinite power of motivation. It can help staff become rich, provided that they help shareholders become rich. VAS pays per results, but not per behaviors. Therefore, it is appropriate to all levels of an organization and lets everyone has an owner's point of view. Finally, VAS is definitely a motivation system. Unlike other traditional mechanism which goals need to be negotiated regularly, goals of VAS system are adjusted automatically through a defined formula.
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