Set Financial Goals that Drive Shareholder Value
By Henk P. Derksen, SVP, Finance & CFO, Belden
Clear Objectives to Reach Financial Goals
We believe that by focusing on four financial goals, alignment across functions can be attained. Belden has a revenue growth, an operating margin, a cash flow, and a return on invested capital goal. Together, these items drive decisions that benefit the company as a whole. My team knows that revenue growth at the expense of operating profit is not a desirable outcome. They understand that acquiring a company for a rich valuation multiple will result in a lower return on invested capital than we’ve communicated to our shareholders. These four financial goals keep us aligned with what we believe drives shareholder value. Investors are keenly aware of this strategy and respect the discipline it instills.
To achieve our long-term goals, we have to understand how each activity, whether a sales promotion or a strategic market or geographic expansion, will impact our performance. Having clear annual objectives in how we reach these goals, measuring our performance, understanding the root cause of why we may not have achieved them, and having a remediation plan to get back on track keeps us all moving in the right direction.
Cloud Based CRM for Daily and Weekly Order Patterns
The world is more connected now than ever before. Political unrest, economic volatility, monetary policy around the world impacts the global business environment. This results in a much more challenging forecasting job for a geographically and market diverse company. Belden has talented finance leads placed in each of our four business platforms around the world. These individuals have intimate understanding of the markets and geographies they are responsible for. We also utilize cloud based CRM tools to see daily and weekly order patterns around the world. When paired with regular discussions with customers, distributors, and sales leaders, we believe we have an appropriate view of our business. VMI initiatives (vendor managed inventory) provide an additional layer of insight as we can now both understand customer behavior, and quickly adapt to a rapidly changing demand signal. Clear, standardized, and insightful data delivered in a timely manner are the most important elements of a good forecast. That accurate forecast should provide consistency in quarterly earnings results for shareholders.