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

Creating high-performing organizations: putting man before money

Contributed by Harald S. Harung, jr., PhD., Faculty of Engineering, Oslo University College, Norway

Corporations that put man before money outperform businesses whose primary goal is to make money. In high-performing, value-based organizations the first priority is on securing the well-being of the associates. The superior performance of value-based management includes substantially less absenteeism and less turnover, more innovation, and higher profit and return on investment.

In this course, graduating engineering and technology students at Oslo University College learn how to develop and maintain a value-based organization. The emphasis is on practices that have worked well on the average for almost a century.

During the spring semester of 2004 this course was taken as an elective by 30 graduating engineering and technology students – in spring 2005 all the third-year students (approximately 400) will take this course.

Core purpose of the course

The core purpose of the course is that the students should learn how to develop and maintain a value-based organization – an organizational culture that ensures high levels of performance and quality of life, both in the short and the long term, and in both good and difficult times.

Relevance of the course

The course has relevance for everybody since everybody operates within a wide range of organizations during their lifetime: businesses, schools, classes, family, circles of friends, networks of professionals, sports and social clubs... In addition, the principles of value-driven organizations are both timeless and industry-independent.

Pragmatic approach

Any knowledge is only valuable – indeed valid – to the extent that it can be put to practice. Accordingly, the strategy of this course has not been to present any sophisticated management philosophy. Rather, the approach has been to outline management practice and organizational behaviour that, over long periods of time, have been successful. The main textbook was the research-based work presented in Built to Last by Collins and Porras. The visionary companies they investigated had an average age of 92 years at the time of their study. These companies were from the USA, and included such well-known corporations as 3M (Minnesota Mining and Manufacture), Merck, General Electric, Hewlett-Packard, IBM, Johnson & Johnson, Motorola, Procter & Gamble, and Walt Disney. In addition, one Japanese company – Sony – was included.

This classic book was used extensively; together with excerpts from the author’s own book Invincible Leadership. Furthermore, a major feature of the course was guest lectures by top-level management from four value-based organizations in Norway:

  • NHO – Næringslivets Hovedorganisasjon, by Finn Bergesen, jr, CEO. (NHO is the main Norwegian employer organization).
  • G. C. Rieber & Co. AS, by Paul-Christian Rieber, CEO. Rieber is a company that has been practising value-based management for 125 years.
  • Manpower, by former CEO for Europe and the Nordic Region: Tor Dahl.
  • Tomra Systems ASA by Svànaug Bergland, Senior Vice-President, Organizational Development and Communications.

Why the Faculty of Engineering?

It may be asked why a faculty of engineering is pioneering value-based management – would it not be more natural for a business school to be in the forefront here? There are at least four possible and complementary reasons for this scenario:

  1. Engineers tend to be down-to-earth, practical people. They are concerned with what works in practice.
  2. Engineers are innovative people.
  3. Value-based management is about long-term thinking. This fits with the ethos of engineering.
  4. The Faculty of Engineering at Oslo University College is itself moving towards a value-based administration with a core purpose that "The students shall succeed" – at college as well as later on in life.

The high levels of equality evident in the Norwegian and Nordic national cultures may partly explain why the course is taught in Norway. This traditional equality means that the creation of organizational cultures with widespread self-management is quite natural, and several such organizations appear to have been in operation in Norway for many years (e.g., those listed above plus Tandberg, Orkla, Norsk Hydro, Håg, Frank Mohn, etc.).

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".

... some defintions

Value-based management is about managing values, attitudes, and meaning – about developing and maintaining the “right” human values. Values that are productive, not only for oneself, but also for others, for the organization, and for society at large – values that generate more for all. During this course, a lot of time was spent on defining, finding, and expressing sound and less sound human values – both on the individual and the collective level.

What are Human Values?

According to The Concise Oxford Dictionary, values are defined as one’s principles, standards, or judgment of what is valuable or important in life. Values are what give our life meaning. They are illuminating stars that we use to guide our life to make it valuable. Since each human being is unique, each and all of us have distinctive values – the same applies to organizations.

Examples of Individual Values

Here follows examples of individual values (of course, the list is virtually endless):

Individual values
Self-actualization Challenge Money
Family Environmental conscious Dynamism
Freedom Integrity Spirituality
Humour Honesty Innovation
Nature Friendliness Progress
Health Peace Leadership

Examples of Organizational Values

Examples of values espoused by particular organizations are:

Tomra Systems, Norway
Integrity, innovation, personal initiative, fighting spirit, and enthusiasm.

Johnson & Johnson, USA
The company exists “to alleviate pain and disease” .

Sony, Japan
To experience the sheer joy that comes from the advancement, application, and innovation of technology that benefits the general public.

3M, USA

  • Innovation - “Thou shalt not kill a new product idea”
  • Absolute integrity
  • Respect for individual initiative and personal growth
  • Tolerance for honest mistakes
  • Product quality and reliability
  • “Our real business is solving problems”

Teaching methodology 1 – lectures and discussion

Lectures and discussions

The course was covered in 24 two-hour classroom sessions – two sessions each week for 12 weeks – followed by a final written examination. The topic of each lecture is shown in Table I. To facilitate learning each lecture was summarised in 3-5 main points, that briefly capture the main principles and ideas covered. These main points were presented at least once during each lecture, and the students were encouraged to review these themes before each lecture and as a preparation for the final examination. Since it is well-known that most of what one takes in during a lecture is lost within a few days, the main points enable one to remember what is important, rather than some meaningless fragment.

Lectures
Lecture Title
1 Leadership is to create results
2 Self-managing associates
3 Joy-based, not fear-based
4 The best of the best
5 Clock building, not time telling
6 No "Tyranny of the OR"
7 More than profits
8 Preserve the core / stimulate progress
9 Big hairy audacious goals
10 Cult-like cultures
11 Try a lot of stuff and keep what works
12 Home-grown management
13 Good enough never is
14 The end of the beginning
15 Building the vision
16 Individual self-actualization and peak performance
17 Workshop 1: The values of each individual
18 Workshop 2: The consequences of personal choice of values
19 Case 1: G. C. Rieber & Co, Bergen, Norway
20 Case 2: Manpower, Norway and globally
21 Case 3: Tomra Systems ASA, Asker, Norway
22 Case 4: NHO – Næringslivets Hovedorganisasjon, Oslo, Norway
23 Conclusion: The whole is more than the sum of the parts
24 Questions and answers

Isolated knowledge from only one discipline has a limited potential, since the ability to see "the big picture" is becoming increasingly important in today’s complex and turbulent society. Therefore, to present a broader framework, a corresponding universal or interdisciplinary principle was presented for each main point (for examples of main points and interdisciplinary points, see Table II). For instance, the practical relevance of self-management and self-organization was illustrated in several complementary ways:

  • The billions of processes continually going on in our body – e.g., to regulate the temperature in every cell and every part of the body according to homeostasis – we have delegated to our autonomous nervous system
  • The enormously complex growth of a fertilised ovum to a newborn baby, and then to an adult human being, is essentially a self-governing process – in comparison, it is relatively modest what the parents and society provides – food, shelter, love, attention, education, and so on
  • In the sheet of paper that you are now looking at, the elementary particles are whirling around at speeds approaching that of light, without the need for any intervention from you.
  • In that part of the universe that can be observed through a telescope, there are around 100 billion galaxies, and in each galaxy there are approximately 100 billion stars. All these "cosmic balls" fly around at enormous velocities without colliding and without creating problems.

This course has had several elements of philosophy, psychology, history, humour, ethical dilemmas, questions concerning intrinsic value as a human, and human rights.

– Christopher Reusch, Student

Some examples
Value-based management Interdisciplinary perspective
1. When one Big Hairy Audacious Goal has been reached, an organization needs a new audacious goal to continue its progress. It is common for visionary companies to set such new goals even after they have become number 1 in the world within their industry. Unfortunately, Ford missed doing this when it had reached its goal to "democratize the automobile", and consequently Ford slipped behind General Motors, and now also Toyota. 1. It is known from developmental or humanistic psychology that self-actualized individuals do not primarily compete against others, they compete against themselves. One advantage of this internal focus – combined with the accelerating proliferation we see today in business and industry into new market niches, products, and services – is that everyone can become a winner. In order to implement more visionary companies, we need more widespread self-actualization.
2. The evolutionary progress we find in the value-based companies is neither planned nor created. Instead the growth in these companies is like biological evolution the way it was described by Charles Darwin: Undirected variation ("random genetic mutation") and natural selection ("survival of the fittest"). In Darwin’s own words: "Multiply, vary, let the strongest live, and the weakest die". 2. Both individuals and organizations performing on a high level are often characterized by frequent luck or fortunate coincidences.
  3. Survival of the fittest suggests how the best companies grow, but also implies that not all can succeed, i.e., a "win-lose" situation. However, the reality is that almost all the processes currently going on amongst the 30 million species in the world are symbiotic (or "win-win"). Furthermore, a new evolutionary theory is currently evolving to replace Darwin’s old theory. This new theory is based on "co-evolution" – at a higher level of development – whereby everything grows simultaneously.

It is well known that one-way lectures lead to a limited learning outcome. Also, values are something intimate to a person or an organization. Attitudes are not so much a question of memory or understanding, but rather of independent reflection and introspection. To address these issues, an important aspect of the classroom activity was extensive dialogue and discussion amongst the students and the undersigned as a teacher. Independent understanding and reflection was also stimulated through a number of exercises and projects, and the final examination tested memory, understanding, and independent reflection.

Workshop on individual values

A workshop was included to stimulate the students in the process of uncovering their own unique, intrinsic values and attitudes. This was done so that each student could get to know himself or herself better – life’s most important, most intimate, and most lasting acquaintance.

First, the students had to ponder over situations where they felt they were performing at their very best, moments when everything seemed right. Next, based partly on this reflection, each student made a list of eight values that she or he considered most important to herself or himself. These values were then mentally put in a rucksack and the exercise was to throw out one at a time, starting with that value which was least important. In this way, each student ended up with a ranking of his or her core values. Finally, each student assessed to what extent he or she actually lived the primary eight values, and what he or she could do to improve living up to his or her own intrinsic nature.

"The workshop on personal values has been very instructive and awakening. It is absolutely something that everybody should think through before they enter working life, where the interests around one become many and conflicting. In particular, in an engineering college there is a need for such a course where one takes a stand regarding the more humane aspects of life, and coexistence and collaboration with others in an organization. For me, this has been a good learning experience to bring with me to a job, and absolutely something I will spend more time reading about, and try to introduce in my working day – wherever I finally end up."

– Geir-Arild Hellesvik, Student

Teaching methodology 2 – assignments, exercises and interaction

Written assignments and other exercises

As a part of the course, the students had to write and hand in a number of assignments and other exercises. These assignments were done in groups of 2-4 students, except for number 3 which was completed individually. The five assignments were:

  1. Write down and discuss the effectiveness of at least five methods to make your associates more self-managing.
  2. Write down what you consider the six most important points in this course, and explain why you have made this particular choice.
  3. Complete the list of your personal values, ranked in order of importance, and the evaluation of how much you actually live each value in your life.
  4. Describe organizations you know based on the ideas of this course. You may describe companies, non-profit or humanistic organizations, public organizations (e.g., the armed forces), sports clubs, circle of friends, school classes, and nations…
  5. Write down and explain the most important core values you would use if you were to start your own business. It is important that the personal values of all the group members are in accordance with the values of the proposed company

The additional exercises included a description made by each student of examples of fortunate coincidences or good luck in their life, plus ethical dilemmas.

Each written report was reviewed and commented upon by the teacher. In addition, all group members of all groups had to participate in the presentation of each report to the whole class.

Free expression of individual points of view

In all these interactions, the students were encouraged to express their own points of view freely, and the teacher did not 'edit' these replies – in accordance with the principle in value-based organizations that it is acceptable to make 'honest mistakes'. In this way the students had the opportunity to assimilate the knowledge and to explore and put words to their own values and attitudes.

"This course has stimulated the use of my own reflection, and my ability to open up, freely to present my thoughts. It has been important and gratifying to dare to express personal experiences, points of view, and attitudes. There has been an air that permits one to make a fool of oneself, but that it is OK anyway. What we say has not been the most important thing, but that we say something and that we are engaged."

– Christopher Reusch, Student

Obviously, the size of the class is important for a courses based on extensive dialogue amongst the students and between the students and the teacher, i.e., the smaller the class the easier it is to have two-way communication and exchange points of view. Everything worked well the first time the course was run, since there were only 30 students in the class. However, next year with 400 students, there will obviously be challenges. To overcome these challenges, the 400 class will be divided into four parallel subclasses of about 100 students, each subclass with their own workshops and tutorial sessions.

Teaching methodology 3 – issues that arose during the course

During the course a number of controversial points were covered and debated. Here follows a selection of a few of these major issues:

Proactive and selective recruitment

It is well-known that value-based companies practise a proactive and highly selective recruitment policy that is centred around attitudes and human values. To illustrate, consider Tandberg, a value-driven Norwegian business that is a global market leader in the video-conferencing industry. Its core values are: "Tandberg is about integrity, enthusiasm, speed, precision, fun, profit, and Tandberg first".

That Tandberg places high priority on the values and attitudes of its employees is illustrated by the company’s recruitment principle: "Hire for attitude, train for skills." It is of course an advantage if a person has the needed skills, but basically only if he or she also has productive attitudes. Perhaps this emphasis on sound human values explains why Tandberg has less than 1 per cent absenteeism due to illness (the average for Norway is about 8.5) and an exceptional EBIT margin of 29% (Tandberg ASA, Annual report, 2002).

This raised the following issue amongst the students: "Is value-driven business only for the select few?" Collins and Porras imply that virtually everybody can develop a visionary company. In contrast to this, based on his own research on individual world-class performers, the author claims that at present there are too few individuals with a sufficiently mature psychology or high enough degree of self-actualisation to develop such higher-order organizations on a widespread basis. Fortunately, the author also argues that there are several factors which point to many such organizations arising in the future:

  • Increasing focus on the proven advantages – including high performance and humane features – of such corporations
  • The availability of scientifically validated techniques that develop individual and collective consciousness
  • The level of consciousness in the world is now rising

The class concluded that it was an advantage to have as many value-based businesses as possible, and that the students upon graduation wanted to work to introduce and spread this form of management.

Doing well by doing good

The students reflected the growing concern today over ethics and environmental issues. The core values of the visionary companies are humane and life-supporting, and as such, encompass ethical and environmentally friendly considerations. In fact, frequently there are core values that specifically address ethical and environmental concerns (see later about G. C. Rieber & Co.). Value-based management includes these considerations, but also many other factors.

Putting "people before money" is the very basis of ethics, i.e., one should not pursue money when the activity can be harmful to people. One issue discussed in the classroom was arms. There are many businesses today that make money from producing weapons. The reality is that these businesses thrive on aggression and fear – the more destruction in the world, the more business they do. Fortunately, there are also many examples from corporate life of leaders who are doing much good, e.g., the former CEO of Sony, itself a visionary company. Mr. Noruio Ohga donated his whole retirement pension to the construction of a concert hall in his hometown!

How, then, can one in society raise the concern for sound morals and the environment? Ample experience shows that it is not sufficient to point out that "you ought to be a nice boy or girl"! The objective of the course was therefore to show that doing business in accordance with sound human values – that includes ethical and environmentally friendly behaviour – in fact leads to improved profit. This is the only way!

Equality between executive and worker

Students are often quite idealistic about life – a feature that some of them unfortunately seem to lose when they later on encounter the sometimes harsh nature of working life. A major issue that arose several times during the course was the huge gap that is often found between top-level management and workers on the floor.

True, value-driven organizations tend to have a substantially smaller gap between executive and worker than that which is prevalent today. Leadership is always by example, but today the example set by leaders is often far from satisfactory. One student related his experience of a troubled company where he had been working. This company was undergoing severe cuts in staff and expenses. The CEO preached that economical soberness was essential for the company to survive – at the same time he bought himself a very expensive car!

When we study the financial reward systems in contemporary organizations, we find that there often is something fundamentally wrong. To be a leader is to serve. A leader is only significant to the extent that he or she has followers that are helping him or her. In other words, there is interdependence – a leader without followers is valueless. However, instead of creating a win-win situation, the prevailing examples set by leaders spread greed, envy, and social stress – the huge compensation gap, common between leader and follower, has a highly detrimental signal effect on the rest of the organization and the society at large:

  • In Sweden, a CEO earns (salary, bonuses, options, and fringe benefits) on average 32 times more than an industrial worker. The situation in Sweden is on a level with the rest of Europe, but the gap is smaller in Norway.
  • Unfortunately, the situation becomes much more unfortunate when we consider the USA, where the average CEO for large corporations earns 430 times more than his or her workers. This high level of executive compensation is completely out of tune with reality since no person is that much more important than his fellow men! Furthermore, no person needs that much income to live a happy and meaningful life. Clearly, such a corporate reality is destructive to trust, value-based management, and higher-order meaning.

The focus of the leaders of visionary businesses is shifted away from themselves – their own power and privileges – to all associates and the whole organization. The point is not to put on show their own power and infallibility, but to build a productive organization that will do well for many, many years – long after they are gone. This is a subtler and far greater form of leadership than that which is often common today.

To illustrate this elevated leadership style, consider the SAS Institute, which develops business intelligence systems. The SAS Institute, with its headquarters in North Carolina, operates worldwide. In order to stimulate efficiency and creativity, employees are given free – or at greatly reduced prices – access to a kindergarten, a health centre, recreation in beautiful natural grounds, a massive sports centre, gourmet restaurants, auto repair, a tailor, a hairdresser, and so on. The associates work 35 hours a week with flexitime.

The company has been growing steadily – in 2002 the sales revenue was 1.2 billion dollars – and is earning money every year. Says Jim Goodnight: "If you treat employees as important, then they become important for the company. 95 per cent of the values in the company disappear out of the gate each afternoon. It is my job to make sure that they return." Whereas the average turnover of employees in the industry is about 20 per cent, the corresponding figure for the SAS Institute is as low as 3 per cent. Goodnight reckons that his company saves huge amounts of money on recruitment and training, and because employees don’t have to travel long distances to carry out necessary errands.

Conclusion on issues that came up in class

In their research on value-based organizations, several of the students picked up that there are many companies who have written down nice values, readily evident on the home page, but that in fact these companies are not value-driven. This discrepancy exists because " values" have become a new fad. The many companies that did not 'walk the talk', were discouraging to several of the students.

In general, the students were in favour of more equality and they certainly cherished the humane values behind the SAS Institute. However, they also realized that it might be difficult to always be able to live up to the high expectations and standards of value-driven companies once they entered real business life.

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.

Conclusions and references

This course has provided evidence that organizations guided by sound human values provide a high quality of life to their associates (including low absenteeism and turnover), and are much more profitable than merely profit-driven organizations. Even so, there are relatively few value-intensive organizations in today’s society.

This may be because not enough attention is given to this effective management style, and because we need more people with sound values and intrinsic motivation. Fortunately, a recent nationwide survey, carried out by the Norwegian University of Science and Technology, indicates that the teenagers of today are much more concerned with healthy values and attitudes than former generations. This is gratifying – it may indicate that we will find many more value-driven organizations in the future.

"I have developed a better self-insight into what qualities I may have as a manager or associate in a company, and gained points of view about what characteristics one ought to have. This growth has, between other things, taken place through the many – more or less structured – discussions we have had during the lecturers, and with fellow students, friends, and family. This development, and the subject matter of this discipline in general, have provided me with thoughts about what criteria I need to satisfy in my future work, and how, if it comes to that, I will organise my own company."

– Erik Devold, Student

The real examination of the course will be to what extent the students later on are able to apply the principles and practices of value-driven management in their working and private life, and the extent to which they will be able to succeed. Yet, it was gratifying that many of the students expressed that the course had given them the desire to start up their own businesses – in part, to secure work in an organization with satisfactory human values!

In conclusion, it is hoped that this course will contribute to raising human values and to creating higher-order individual and organizational performance and achievement.

Acknowledgements

The author wishes to thank Mr. Per Ø. Staff, Dean of the Faculty of Engineering, Oslo University College, Sue de Verteuil and John Peters of Emerald for their valuable comments and suggestions during the preparation of this paper.

Recommended Reading List

  • Collins, J. C. & Porras, J. I. (2002), Built to Last: Successful habits of visionary companies, Harper Business Essential, New York, NY
  • Harung, H. S. (1999), Invincible leadership: Building peak performance organizations by harnessing the unlimited power of consciousness, MUM Press, Fairfield, IA
  • Harung, H. S. & Rieber, P-C. (1995), "Core values behind 115 years of development: A case study of G. C. Rieber & Co., Bergen, Norway ", The TQM Magazine, vol. 7 no. 6, pp. 17-24.
  • Harung, H. S. (1996), "A world-leading learning organization: a case study of Tomra Systems, Oslo, Norway ", The Learning Organization: an International Journal, vol. 3 no. 4, pp. 22-34.