Reason 2: EVA is more practical and understandable than rate of return (ROI...) (3/4)

• It is also very common that in ROI-steered companies many employees do not really know what profitability is
  • Often many educated employees know something about the flaws of ROI and therefore they have some vague conception that real profitability might also improve although ROI decreases
    • Since the company does not have any better profitability measures it is admittedly very difficult to get the whole picture about profitability
  • ROI is also too complex consept to explain to all employees (not many companies have succeeded (or even tried) to explain to factory employees what is ROI and what is real profitability and how they can influence them)
    • I have also met some financial accountants and account managers that do not have comprehended completely what profitability is and what pitfalls ROI include so it is not wonder that these things are difficult to explain to other employees

• Therefore ROI-steered companies and their employees do not always know how to operate to improve the real profitability i.e. the position of shareholders

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