NEW YORK, April 22, 2002 - Top executives at multinational companies consider non-financial performance measures such as product and service quality and customer satisfaction and loyalty more important than current financial results in creating long-term shareholder value, according to a Management Barometer survey from PricewaterhouseCoopers. Among those surveyed, 89 percent cited product and service quality as a contributor to long-term shareholder return. Customer satisfaction and loyalty was cited by 83 percent.  Other contributing factors included operating efficiency, cited by 75 percent; current financial results, 71 percent; innovation, 62 percent; and employee satisfaction and turnover, 47 percent.  While executives cited non-financial measures most often as contributing to long-term shareholder return, financial results remain a key factor in making ongoing management decisions. For this purpose, current financial results and product and service quality were cited as important by 81 and 83 percent, respectively.  Other highly ranked measures included customer satisfaction and loyalty, 73 percent; and operating efficiency, 72 percent.  “Finding a way to accurately predict future financial results has been the Holy Grail for executives,” said Frank Brown, global leader for assurance and business advisory services for PricewaterhouseCoopers. “Though current financial results are very important to day-today decision making, executives find them less important than other performance measures in predicting future shareholder returns.  Executives increasingly recognize the importance of non-financial measures such as customer satisfaction and product quality in determining how the markets value their companies.”   Attempts at Initial Linkage According to the survey, 69 percent of multinational companies have attempted to link a broad range of measures of key business performance factors with future financial results or share price.  One in five companies (21 percent) said they had been very involved in developing this linkage.  Overall, those attempting to link business performance factors to future financial outcomes had greater revenue growth than those that do not.  They generated 2.5 times greater revenue growth over the past five years, and are forecasting 28 percent higher revenue for the next 12 months, compared to companies that do not link measurement and performance. Development of Models Of the companies surveyed, 61 percent said they had completed or nearly completed formal, causal “value driver maps” or models, linking together the key financial and non-financial factors that lead to long-term total shareholder return. This includes 66 percent of service companies surveyed, 58 percent of product sector companies, 54 percent of technology companies and 68 percent of companies in other sectors.  Overall, 29 percent have completed or nearly completed such a model, and 32 percent report they have a model that is partially completed. Companies that had value driver maps were the fastest growing among the survey sample, projecting 12-month revenue growth of 7.5 percent, compared with 5.4 percent for those who do not use them.  “Executives can no longer rely only on traditional financial measures in making decisions that impact long-term shareholder value,” Brown said.  “The results show that companies that understand the linkage between performance measures and their future financial results grow at a faster rate than those who do not.”  PricewaterhouseCoopers’ new “Management Barometer” is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc. PricewaterhouseCoopers (www.pwcglobal.com) is the world’s largest professional services organization.  Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world. PricewaterhouseCoopers refers to the member firms of the worldwide PricewaterhouseCoopers organization.