Performance Measurement

GENIUS IS ONE PERCENT INSPIRATIONAND NINETY-NINE PERCENT PERSPIRATION The factor that seems to explain the most about great performance is something that researchers call deliberate practice. Exactly what that is and isn't turns out to be extremely important. It definitely isn't what most of us do on the job every day, which begins to explain the great mystery of the workplace�why we're surrounded by so many people who have worked hard for decades but have never

More and bigger are not proper metrics on which to base compensation.  If you pay people to produce lots of stuff they will produce lots of stuff.  But what if the stuff does not work or there are no buyers for the stuff?  Returns on investment plummet.  That's what Pfizer (PFE) used to do with their chemical engineers - they paid them based on how many compounds they produced, not on how many were successful or approved and

Analysts tend to miss the forest for the trees.  In retail they are obsessed with the business model drivers like sales per square foot, same store sales or gross margin.  Certainly, these metrics are important for understanding the dynamics of a retail business - but to what end?  The bottom line is whether a business model and management team create value per share - that's the single minded objective function for any for profit business.  It's

BERK:  Marc Hodak's teachable moment on the making (up) of news by torturing stats to show how much the big bad CEOs get paid.  In this case the WSJ highlights entrepreneurs who realized the gains of their stock appreciation in the current period. The WSJ uses the utter lack of real news to put an article on “Top Paid CEOs” on top of its front page.  The decade’s champ?  Larry Ellison.  He “made” $1.84 bilion during the naughts.

The Bank of England's new Financial Stability Report points to a perceived dramatic increase in the importance of sovereign debt risk to market participants. In November 2009, only about 25% of market participants surveyed in the UK were concerned about sovereign risk. Now nearly 70% of those surveyed see it as a worry. RBS, who republished the Bank of England's chart, suggest that this move in UK market sentiment is not surprising. The dramatic increase

What would you do if the government promised you steady wages but instead cut 21.2% from your revenue? Retire, fire people and concentrate on the 20% that pay full price? Aside from breaking her word to the AMA and physicians across the country, Democrat House Speaker Nancy Pelosi has effectively demolished doctor reimbursements for most of the healthcare industry.  The 21.2% Medicare fee schedule cut has taken effect, but what most do not realize is that

Yesterday on This Week, Rahm Emanuel responded to Jake Tapper's question concerning the Obama administration's industry intervention into auto companies, insurance companies and oil companies by saying, "In the case of General Motors, the prior administration wrote a check without asking for any conditions of change." via abcnews.go.com  It's a provable lie. And it's one more example why businesses and investors are on strike - the administration seems like that they

BERK:  Simple but true...Earned success as described in the below video shows why "redistribution" of income and wealth to make populations "equal" does not create happier populations.  Instead it creates miserable populations.

BERK:  Critics of value-based management (VBM) often complain that companies that have a single overarching objective to create long-term value necessarily must skimp on other important objectives. Tidewater (TDW), the offshore, oil service boat company, defies the critics.  TDW puts safety first - before anything else - in its investor presentations, in its employee training and in its meaurement system. And TDW is an EVA company.

The goal of ValueAligned investing is to identify companies with incentive systems that motivate value creating behavior, and to find those companies that either have, or are moving toward, systems that motivate profitless, value destroying growth.  In a new paper (here) compensation consultants and EVA experts Steve O'byrne and David Young, offer investors a guide on