Value-based management: learning to create high performing organizations by putting man before money Part: 2

Product Information:-

  • Journals
  • Books
  • Case Studies
  • Regional information
Real World Research - #RealWorldResearch
Request a service from our experts.

Value-based management: learning to create high performing organizations by putting man before money

Options:     Print Version - Value-based management: learning to create high performing organizations by putting man before money , part 2 Print view

An outline of value-based management

Traditionally, businesses have placed the highest priority on making money – concern for employees and human values has typically received less attention. This is evident from the Norwegian term for business administration: "Økonomi og ledelse", which puts "economics" before "leadership". In a Financial Times (June 7-8, 2003) interview, even the grand old man of conservative economics – Milton Friedman – concedes "The use of quantity of money as a target has not been a success". In line with this, a 2003 survey by the Argument Group, found that three out of four Norwegian executives reject that a corporation’s sole responsibility is to give the owners the biggest possible profit.

Money, therefore, is not the only goal of business – in fact it is not even the major goal. Money is needed for everything in the world, but it is not enough for living a really good life. Man needs a purpose beyond money. In fact, a 2004 survey by Roffey Park & Management Today of 750 managers and board members found that close to 70 per cent of them were searching for a deeper meaning in their job.

In contrast to money-driven businesses, value-based organizations practice leadership and management through shared productive and ethical human values. Within this broad framework, self-managing individuals can be left to experience and display high levels of meaning, enthusiasm, initiative, creativity, integrity, happiness, and self-organization – for the benefit of themselves and their corporation. Such organizations realize and live according to the principle that their associates are their greatest assets. The basic concept of putting man first is beautifully expressed in the German philosopher Immanuel Kant’s third Categorical Imperative: "Act so that you treat humanity, whether in your own person or in that of another, always as an end and never just as a means."

Of course, value-based management also includes making money. It is not a question of either man or money; it is a quest for both happiness and profit. It is therefore gratifying that research shows that value-based or visionary companies perform on a markedly higher level – including that they earn much more money – than merely profit-based companies. In fact, from January 1, 1926 until December 31, 1990 the average return on investment for the stock in the 18 visionary, high-performing companies investigated by Collins and Porras – as reported in their book Built to Last – grew over 15 times more than the general USA stock market.

These high-performing companies usually take great care in developing and adhering to a vision that normally includes the following main factors:

Envisioned future

A big hairy audacious goal of setting where the company wants to be in 10-30 years, e.g., Henry Ford’s goal to " democratize the automobile" (early 1900s) and Sony’s "Become the company that most changes the worldwide image of Japanese products as being of poor quality" (early 1950s).

Core purpose (mission)

The company’s fundamental reason for being, the "why", e.g., Walt Disney’s "to make people happy", Merck’s (allopathic medicine) "to preserve and improve human life", and Tomra’s (the world-leader in reverse vending machines for the recycling of beverage containers) "to help the world recycle."

A set of core values

The backbone of their unique corporate culture These values are humane and productive, essentially unchangeable, and almost "holy". Examples are G. C. Rieber & Co., Norway (real estate and polar region research ships): "One shall not do any business that cannot reasonably be considered to be to the advantage of both the buyer and the seller", and Ford, USA: "People as the source of our strength".