The Development of a Value Creating Competencies Index : The Economic Value Added (EVA) Approach

Shareholders always expect business executives to create real economic value and wealth for their organisations, and accordingly, compensate these executives based on the economic value that has been created. Economic value added (EVA) is regarded as the true measure of economic value and has since been utilised as a tool for executives' compensation. Inherent to compensating executives on EVA, is the underlying assumption that executives were selected on their ability to create value. However, studies fail to indicate where EVA has been utilised in the selection of executives. This renders a disconnection between selection and performance measure. This article put forward the argument that attributes and competency measures are some of the measures that can predict performance. Based on this, conceptualises that attributes and competencies that are linked to EVA be identified in order to develop a competency measure that is based on EVA