By collocating decision rights with the rights to their capital value, alienability provides both a measure of performance for individual decision makers and the rewards and punishments to motivate them to use those decision rights efficiently. EVA can be measured from the corporate level down to the assembly line. Hence, incentives based on EVA provide objective and local targets that link the compensation of employees, senior managers, and investors. EVA allows a company to give decision rights and incentives to employees. Cascading decision making to employees usually constitutes a major shift in corporate policy.
Executives fear cultural change.
Yet, empowerment without accountability leads to poor behaviour just as incentives without empowerment wastes resources. Building a culture of value creation, where corporate governance comes from within, provides companies with a competitive advantage over those which remain hierarchical and compliant. A sense of urgency is required to motivate an organisation in the middle of economic expansion, with patents, trademarks, or brands which currently provide cash flow, and when financial markets continue to skyrocket. If senior executives want to win, they must avoid complacency and provide continuous improvement in performance. Innovation and acquisition may drive most of the potential value enhancement.