Indexed operational performance measurement
Indexed operational performance measurement is a performance measurement system . In the indexed operational performance measurement, the internal performance accounting is compared with the performance accounting of comparable companies (so-called peer companies ). Comparable companies are those that from the investor's point of view are considered alternative investment opportunities with comparable operational risks (investor's perspective). The same perspective is used in the industry beta factor calculation for determining the cost of capital .
The comparison of the performance calculation is carried out in two ways: Firstly, as the difference between the internal performance calculation and the average or median of the performance calculations of the comparison companies (= operational index ). For specific key figures , this difference is called operational alpha (for example operational EBIT alpha). The operational alpha is thus the operational counterpart to the alpha factor : It is an operational indicator based on key figures for the relative return of the investor on the market value of the company.
Second, the comparison can be expressed by calculating the percentile rank of the internal accounting in relation to the accounting of the comparable companies. This percentile rank is known as the operational rank (for example, the operational EBIT rank). Several operational ranks are used in the operational radar and operational contribution evaluations to measure value gaps and value potentials in different companies, business areas or investments independently of the cycle.
Differentiation from benchmarking
The indexing of operational performance differs from classic benchmarking in terms of perspective (standpoint of the analysis). Classic benchmarking does not recognize the starting point of the investor's perspective, but focuses primarily on comparable companies that have similar products or similar business processes. In the peer universe, indexing primarily uses companies that have similar sales or procurement risks and are therefore exposed to similar operational risks from the investor's perspective. The aim of benchmarking is therefore primarily to improve products and processes with regard to an external benchmark ("best in class"). The aim of operational indexing is to measure the performance of operational activities independently of external factors and in a universally comparable (i.e. standardized) way. Because it is primarily about a development or trend analysis or the deviation from operational trends, one speaks of an operational index and not of a benchmark.
Applications
The indexed operational performance measurement has the following advantages over a non-indexed performance measurement:
- Neutralization of external factors: If the internal performance accounting is viewed relative to an external operational index , then external factors are eliminated, since these affect both the internal performance accounting and the external index.
- Standardization of the key figures: If the key figure from the internal performance calculation is given as a percentile rank compared to the comparable companies, then a standardized performance measure is obtained: The percentile rank has values from 0 to 100%, which are universally comparable.
Two applications of indexed power measurement have established themselves:
- Indexed bonus targets are used to set bonus targets independent of the business cycle. Indexed bonus targets adapt to market developments and are therefore fairer and thus remain valid for longer. An example of indexed bonus targets is the bonus index, which is published annually by the Zurich financial research company Obermatt for the German HDAX companies and the Swiss SMI and SPI companies.
- Indexed strategic controlling is used to measure performance independently of the cycle, which enables false signals from traditional performance accounting to be uncovered. See Operational Index , Operational Rank , Operative Radar , Operative Contribution .
Thanks to the indexed operational performance measurement, Obermatt AG calculates a bonus index for listed companies (HDAX, SMI / SPI) with an indexed bonus recommendation. More at:
- NZZ: Cantonal banks could pay high bonuses
- Börse-Online: High bonus, high share price
literature
- Hermann J. Stern : Market-Oriented Value Management, Achieving Competitive Advantages Using the Finance Intelligence Radar, 2007, Wiley & Sons, Weinheim, ISBN 978-3-527-50258-5
- Obermatt: Indexed operational performance measurement [1]
- Obermatt: Publications [2]
Individual evidence
- ↑ Hermann J. Stern : "Benchmarking in the Supervisory Board for Corporate Control" In: Journal for Corporate Governance ZCG (December 2007) Article as PDF ( Memento of the original from August 28, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
- ^ Page 317 in: Tim Koller, Marc Goedhart, David Wessels: "Valuation", 4th English edition, 2005
- ↑ Stern, Hermann, "Making Bonus Systems Fair and Crisis Proof", March 11, 2009. Article as PDF in SSRN and Stern, Hermann, "A bonus in the recession? - Yes, provided it is market-oriented!", In: CFO Aktuell, December 2008 Article as PDF ( Memento of the original from October 11, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ HDAX bonus index: Börse Online, May 7, 2009, page 11; SMI / SPI bonus index: Finanz & Wirtschaft, April 29, 2009, page 25; Online sources: Free download of the bonus indices from www.obermatt.com ( Memento of the original from May 18, 2009 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
