Value Creation is Based on Financial Performance

Value Creation is Based on Financial Performance

In the Raise Your Visibility & Value model, value is defined as the outcome of a situation when the outcome of a situation exceeds the cost incurred by a satisfactory margin. Raising your value is defined as performing activities that connect individual contributions with business performance. To be considered a valuable employee, you must tie as many of your activities as possible to how your organization measures how well it’s performing. For most organizations, business performance is predominantly measured through financial performance. As you work to create value for your organization, you must focus your activities on your company’s financial performance.

Managing Expenses Effectively

Why must value creation be tied to your organization’s financial performance? While the foundations of a family are its historical, legal and genetic connections, the foundation of an organization rests in its financials. Your organization needs revenue in order to survive. Concurrently, your organization needs to manage its expenses effectively.

Finance, like other business disciplines, has a language all its own. You should know the following: Without a doubt nothing will end a well-meaning Human Resources initiative, the roll-out of a new technology infrastructure, or the purchase of a much-needed fleet of trucks than a drop in revenue or an unexpected expense. Nothing short of a natural disaster will impact the activities that are important to you and your organization more than the direction of your organization’s finances.

Good Performers vs. Valuable Employees

Hence, financial management offers the greatest opportunity to create value in your organization. Good performers do their jobs well and expect that their good performance will make a positive impact on their organization. Valuable employees do their jobs well and connect their individual contributions with business performance.

Image by Gerd Altmann from Pixabay

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