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Disadvantages of Value Based Management

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What are the disadvantages of Value Based Management? VBM Drawbacks??

As often the case, the drawbacks or disadvantages of Value Based Management are the opposite of its benefits.

  • VBM is an all-embracing, holistic management philosophy, often requiring culture change. Because of this, large-scale VBM initiatives take considerable time, resources and patience to be successful.

  • Value creation may sound more simple than corporate strategy, but it isn't. It is actually more or less the same.

  • Measuring for value, performance management and balanced scorecard are very powerful management support tools and processes, but have a cost of their own so it is not advisable to go to deep in detail or use metrics that are over-complex.

  • Extreme caution must be made not to measure the wrong things as this may almost certainly lead to value destruction.

  • VBM requires strong and explicit CEO and executive board support.

  • Comprehensive training and consulting support is advisable or even necessary, but can be quite costly.

  • The perfect VBM or valuation model has yet to be invented. No matter which one you choose, there will always be drawbacks to consider.

Compare: Benefits of Value Based Management  |  History of Value Based Management



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