An overview of the implementation of Economic Value Added (EVA™) performance measures in South Africa

  • HM van der Poll
  • NJ Booyse
  • AJ Pienaar
  • S Büchner
  • J Foot
Keywords: EVA™, Economic Value Added, performance metrics, performance measurement

Abstract

Although Economic Value Added (EVA™) might improve the
measurement of organisations’ performance, it seems not to be used
widely in South Africa. The need to measure financial performance
and the different metrics that can be used should be investigated
to establish the best measure for each sector. The purpose of the
reported study was to determine the extent to which EVA™ is used
by South African organisations. Furthermore, this investigation
focused on methods used by these organisations to calculate EVA™
and aimed to determine the South African business sectors in which
it is most likely to be implemented. A focus group discussion was
conducted with financial experts, which included consultants,
analysts and statisticians, to discuss EVA™ and challenges relating to
its implementation. It was established that South African companies
will benefit from using EVA™ in conjunction with other metrics.
Management needs to understand its own organisation to be able to
implement the most appropriate performance metric applicable to
the organisation. It is recommended that companies do a thorough
internal analysis of their organisations to assist them in making an
informed decision regarding the appropriate performance metric,
which includes EVA™.
Section
Articles

Journal Identifiers


eISSN: 1998-8125
print ISSN: 1561-896X