Data is collected and analysed within the company. A financial report reveals whether the company has performed well or not. That’s all in the past: Now, management has to look ahead and make the right decisions to manage a company. Key figures are used for this purpose. A key figure is an objective and controls the actions of employees. “Tell me the key figures you have and I’ll tell you which actions they generate.” Most people don’t like hearing this as the general assumption is that employees think for themselves. If management severely relies on key figures, however, thinking will be penalized, which is why defining correct key figures and decision hierarchies is important for all managers who want to steer correctly.
First it is important to understand the chain of effects: EBIT, ROI, ROCE, EVA, ROE or working capital. Each key figure is only as good as it is understood and may be employed differently in many other countries.
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