In recent years the competition faced by Japanese companies has expanded from intense competition in product markets to include competition in the markets for financial and human capital. Stern Stewart began working in Japan in 1998 and opened its office in January of 1999 to help companies address these changes through the enhancement of their corporate governance systems.

The EVA Management System has three main thrusts in focus. The first and most widely understood is its unique characteristic as a measurement tool, that EVA focuses managers on the impact of not only the income statement impacts of their decisions but on the balance sheet impacts as well. As Japanese companies try to improve their capita efficiency EVA is uniquely positioned to drive this change.

The second issue facing Japanese companies in an environment of global competition is the issue of decentralization. We have helped companies to measure and better understand their business by P&L and balance sheets at the level of individual businesses. However, measuring EVA at these levels is not sufficient, companies must conduct company-wide training to educate managers and employees of their purpose and roles in creating value. EVA has proved effective in penetrating deep into over 300 global companies because of its clear and easy to understand message.

The last and perhaps most important of application of EVA is in the area of incentive compensation. As companies decentralize and allow business unit managers greater responsibility for decisions they will need a means of holding managers accountable. After all, corporate governance is a question of performance accountability. Once managers have been given a clear measure to focus on and the tools and responsibility for making decisions with this measure in mind the logical next step it to link their compensation.

Corporate governance is a question of accountability of managers for the outcomes of their decisions. EVA can lead the change in management systems that is necessary to meet the increasing demands of global competition.

EVA must be customized to match many important aspects of Japan's culture and Stern Stewart has successfully adopted its EVA Management System at several prominent Japanese companies. These companies have adopted EVA as a means of meeting the challenges they are facing in their global industries.

Our staff is comprised of both Japanese and non-Japanese with backgrounds in both finance and industry with extensive experience applying EVA to a variety of industries both in and outside of Japan.


For further information, contact:

Erik Stern, President International