Gathering Data
Creating a customized definition of EP requires being able to clearly relate the activities of specific employees or teams to the financial results of their business unit or the whole company. These relationships generally must be understood at a fairly granular level in order to avoid creating a measure that sometimes moves independently of (or, worse, counter to) value creation.
Understanding these relationships will require information about business activities, financial results, and their relationship, including:
- Business plan or investment thesis
- Organizational data
- Financial data/reports
- Strategic plan (if distinct from the business plan) and capital budget
Financial data includes P&L figures and notes and, ideally, balance sheet data for each EP center. A review of the strategy, business plan, or investment thesis with top management and others would be necessary to understanding the business model well enough to design an appropriate measure of value creation.
