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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 7 Print view

Theory exemplified by guest lecturers from Norwegian business

To augment the knowledge and experience from visionary businesses in the USA, the course included guest lecturers from four Norwegian value-based companies. It was gratifying that the Norwegian business leaders exemplified and verified the principles and practices described for the American corporations. Naturally, there were also differences, notably in areas that related to distinctive national cultures. But overall, it was striking to observe the similarities across the Atlantic. Below, we will briefly review NHO, G. C. Rieber, and Manpower.

NHO - Næringslivets Hovedorganisasjon

NHO is the main employer organization in Norway. This organization's vision is to 'awaken new thoughts' and its core values are 'trustworthiness, bravery, accessibility, and teamwork'. The CEO, Finn Bergesen, jr., spends a considerable amount of his time on working to maintain a mature corporate culture and to stimulate enthusiasm, motivation, initiative, and creativity throughout NHO. As part of the philosophy to encourage self-management, he leaves the job to each individual and interferes very little. If anyone approaches him with a more specific question, he tends to reply that it is their own job to sort this out – they are paid to do it, and have more knowledge of their specialized field than he has. Mutuality, equality, and interdependence are thus stimulated amongst leaders and followers.

"A leader without a follower is just a guy taking a walk."

– Finn Bergesen, jr., CEO, NHO

Bergesen feels that knowledge of human nature is essential to a leader. He considers that the great writers and poets such as Ibsen, Shakespeare, and Dostojevski best describe human behaviour. For this reason, he spends much of his leisure time reading great works of literature, rather than management books.

The associates at NHO have no work hours – instead everybody is responsible for the completion of his or her job. Experience shows that greater freedom leads to less stress, and as a consequence, to less absenteeism. In line with this, the absenteeism at NHO due to illness is only 3.1 per cent, while it is around 8.5 per cent for the workforce in Norway in general.

Since this is a non-profit organization we cannot gauge its financial performance in the usual corporate way. However, a sound financial performance is evident from the fact that NHO has halved its membership fee in recent years, while still maintaining a satisfactory operation.

G. C. Rieber & Co

G. C. Rieber & Co in Bergen, Norway was started 125 years ago, and is still going strong. Originally, the firm was a small wholesale company that traded hides and skins. Rieber has undergone many changes in its portfolio since that time, and today its main business is real estate and polar region research ships. However, its core values have remained essentially the same all these years! Let us consider two primary values or commercial principles that also include ethics and concern for the environment:

Ethics

The first guiding principle of G. C. Rieber & Co., formulated around 125 years ago by the founder, is: "One shall not do any business that cannot reasonably be considered to be to the advantage of both the buyer and the seller." This theme is similar to Newton's 3rd law of motion: 'for every action, there is an equal and opposite reaction', and also expresses the fundamental reciprocal principle of ethics – do unto others as you would have others to do unto you. As a consequence of this fair principle, this business-to-business company has third generation suppliers, customers, and employees. Paul-Christian Rieber – himself the fourth generation in the Rieber CEOs – explained to the students how his company enacted this principle. If the other party were of equal strength to them, they would be strict in demanding reciprocity. However, if the other party were considered weaker, they could be more modest in their demands.

Environment

The firm's operation shall not lead to the squandering of natural resources. These resources are to be left to our successors in at least as good order as they were when they were handed on to us.

A few years ago, the shipping division was separated out into what is now known as Rieber Shipping. The majority of the shares in Rieber Shipping were sold and the shipping company was listed on the Norwegian stock exchange. However, the parent company soon became deeply concerned by the shortsightedness that was prevalent on the stock exchange. To create a balance between long-term and short-term thinking, the parent company thus bought back control of the shipping company.

The financial performance of G. C. Rieber has remained sound. For the 10-year period from 1985 to 1994 the average profit/sales was 10.3 per cent. The following figures show that recent performance continues on a high level (please note that in years 1999 and 2000 the shipping division was not included).

Financial performance
Year 1999 2000 2001 2002 2003 Average
Sales (MNOK) 549 390 938 909 1120 781
Profit / Sales (%) 18.2 15.6 19.8 15.5 17.5 17.3

In line with what is common practice in visionary companies, G. C. Rieber promotes from within. The only exception to this rule was the recent employment of a divisional manager; the background of this person was IT and he had no former exposure to the unique Rieber culture and value-system. The engagement proved a disaster, and he soon left the company.

Visionary companies like celebrations very much. At present the company is putting a lot of work and attention into making its 125-year anniversary an enjoyable success. But G. C. Rieber & Co. is not only busy preserving its core. To accelerate progress, the firm is now employing a new person whose only responsibility will be innovation and new business development.

In spite of all the good news, a growing concern at G. C. Rieber & Co is a high and rising absenteeism due to illness, now approaching the average level in Norway. This is atypical for a value-driven organization. The company now must analyse why this is happening.

Manpower

Manpower is number two in the world on staffing and a clear market leader in Norway. Tor Dahl was employed as CEO of Manpower Norway in 1965, and started the company in this country. Since then he has worked for Manpower all the time until March 2000. Mr. Dahl has been European Director for six years and CEO for the Nordic region for 20 years. Most of this time he has been developing and implementing value-based management, and he is now an authority on this advanced style of management.

After stepping down, Mr. Dahl was put in charge of developing a set of core values for Manpower globally and for formulating a worldwide policy for corporate social responsibility. In Table IV, Tor contrasts value-based organizations with the normal task or rule-driven organizations.

Value-based organizations & task or rule-driven organizations
Rule or Task-based Management Value-based management
Technology, energy, and
capital as prime resource
People, knowledge, and ideas as primary resource
Subordinates, employees, workforce, hands Associates, partners, organizational members
Social differences and barriers Equality
Mistrust Trust that gives self-trust or self-confidence
Standard of living Quality of life, meaning
Exclusion, alienation, fear Inclusion, integration, participative
Adjustment, discipline, obedience Initiative, consensus, alignment
Bureaucracy Development, change, flexibility
Egocentric behaviour, fragmentation Community and wholeness
Limitations, control Creating possibilities
Analytical, logical, rational Both logical and intuitive
Facts, lack of feelings Concern for other people, kindness
Work is paid by the hour, employee is paid to act Work is learning and development, associate is paid to think and act
Sharp division between work and private life Work life and private life are intertwined
Hierarchy, pyramids Projects, network, flatter organization
Authoritarian Authority
'Do as I tell you to'; huge gap between preaching and practice 'Walk the talk'; enacting sound leadership through example

Based on his extensive positive experience from trusting people, Mr. Tor Dahl has formulated the principle that Trust generates trustfulness. This principle is also known as Tor's law . It has two implications. First, if you give a person trust, it substantially reduces the chances that he will behave unethically. Second, if he behaves immorally, he will usually trick someone other than the one who has given him trust.