The Value of Value-Based Management

Many organisations espouse to implement value-based management. There are several definitions of what value-based management is, but most are not very illuminating. The consensus is that value-based management is a tool to achieve organisational consistency, or from a more cynical perspective, values are a device to control behaviour.

Philosophers refer to words such as value an ‘essentially contested concept’, which means that there is no agreement on the definition of value, which has espoused a complex branch of philosophy called axiology.

In practice, value-based management leads to a list of abstract nouns that the organisation advocates. But, which of the many hundreds of positively interpreted abstract nouns in the English language do you choose?

Which value is critical to your organisation? Do you prefer creativity over punctuality? Or should we have pride in our work or is it dedication we are after? Any word that has positive connotations and ends in -tion, -ism, -ity, -ment, -acy and so on will do. Defining a list of value, which usually is no longer than four, is restrictive and leads to the implicit exclusion of other positive values.

Value-based management is primarily a crude implementation of virtue-based ethics. This approach leads to tensions because most organisations don’t work according to virtues but follow a consequentialist approach; valuing those behaviours that lead to positive outcomes. Consequentialism can be problematic because not all activities that lead to the right results can be considered ethical. I have argued in an earlier paper that deontic constraints are required to maintain the goal-oriented nature of business in an ethical environment.

Value-based management is of little value

In value-based management, it is assumed that following an arbitrary list of abstract nouns will lead to good business outcomes. These lists of abstract nouns are a cheat-sheet for employees on how to behave and a way for management or colleagues to assess the behaviour of others.

The values chosen from the multitude of available abstract nouns are usually decided democratically, without systematic examination of all available options. I prefer to stick to the list defined by Aristotle, more than 2000 years ago: wisdom; prudence; justice; fortitude; courage; liberality; magnificence; kindness and temperance.

Most businesses are not honest in their chosen values, Enron being an excellent case in point. The never list greed any of the other deadly sins as their real core values. And those so-called deadly sins are not always wrong. Peter Nowak argued convincingly that the seven deadly sins propelled humanity more for good than bad.

Value-based management is of little value as it ignores the practical outcomes of behaviours. It is also flawed because it arbitrarily highlights some values of others. Surely to be ethical, we should behave in accordance with positive values and not just those printed on our coffee mugs.

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