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To reinforce the strategy, processes for budgeting, measurement and compensation must be aligned with the shareholder value focus. The very same measures used to develop the strategy need to be the focus of the budgets and scorecards to ensure accountability for execution. To motivate owner-like behavior requires incentives based on comprehensive measures of growth and efficiency at the appropriate level of the organization. If suitable, incentives can be multi-year, with money at risk and with serious upside opportunities to simulate ownership inside the organization, but care must be taken to avoid promoting a gambling mentality.
By taking these prescribed steps and embedding Internal Capitalism, executives will have the tools and frameworks necessary to deliver the performance demanded by that relentless task master—the shareholders.
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