Value-based management is the integration of four management processes: planning, project management, reporting, and compensation. To achieve this integration, a viable VBM system must comprise of at least four elements:

1. An objective measure of current profitability that accounts for the cost of capital.

This measure enables managers to make trade offs between all factors of productivity, i.e., revenues, costs, and investments, in their decisions and actions.

2. A strategy that relates shareholder expectations to the present value all future projects.

Such a strategic linkage enables managers to reliably trade off near term versus long-term decisions and actions.

3. Variable compensation funded by actual value creation over a proximate time period.

Rewards related to performance promote trade offs between personal and corporate welfare in favor of shareholders.

4. Judgment of the relative contribution of specific teams or individuals to overall value creation.

Only experienced judgment can distinguish value creating behavior below the level of aggregate results, needed to promote individual motivation and group morale.