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Chapter
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1
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Introduction
to Value-Led Organizations
A number of changes are impacting on organizations today including:
increased stakeholder activism; technological enhancements;
higher levels of personal investment; greater informational
requirements; globalization; stronger scrutiny of board practices.
These changes are creating a need for organizations to clarify
their values, purposes, and goals. There are increasing external
pressures on organizations from shareholders, regulators and
employees to be value-led. It is important that organizations
understand what it means to be value-led and to seek out a
number and variety of role models. |
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2
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What
is a Value-Led Organization?
A value-led organization focuses on value. A value-led organization
manages for value. Stewardship or care is the hallmark for
value leadership. Value leadership applies to all types of
organizations. The principles of value leadership are long-standing.
Being value-led is multidimensional. Value-led organizations
strive to be value-led in as pervasive and integrative a way
as possible. In reality, not all value-led organizations are
value-led in every dimension at all times. |
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3
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The
Evolution of Value Concepts for Organizations
The evolution of value concepts for organizations comes from
diverse sources. Corporate finance, risk analyses, business
ethics and business law, financial and management accounting
are all important disciplines with implications for value-led
organizations. Miller, Modigliani, Markowitz, Sharpe, Black,
and Scholes are some of the pioneers of value-related concepts
in corporate finance. GM and GE were very early adopters in
the 1920s and 1950s respectively of value-based metrics and
compensation concepts. |
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4
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The
E-Dimension of Value-Led Organizations
With the advent of the Internet, value-led organizations are
faced with new issues and opportunities. Value-led organizations
must carefully weigh all aspects of e-strategy implementation.
The valuation and assessment of e-commerce benefits and costs
is more complicated than many organizations realize. Value-led
organizations use the availability of the new technology as
an opportunity to address both old and new organizational
problems. |
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5
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The
Impact of Globalization on Value-Led Organizations
Assessment of culture is critical to successful implementation
of global strategies. Value-led firms establish policies on
a number of dimensions when entering foreign markets. Globalization
complicates measurement issues and these issues must be addressed
to ensure good decision making. Globalization has expanded
the opportunities for value-led firms to benefit from multiple
alliances and partnerships. |
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6
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Current
and Evolving Issues for Value-Led Organizations
There are a number of controversial topics and key issues
for value-led organizations today. Board composition and board
size is an area of controversy. Value-led organizations continue
to be challenged to maximize value through diverse boards,
workforces, and supplier participation. Reward structures
continue to evolve. Value-led organizations use value-led
metrics for compensation and are starting to consider more
carefully the mix of fixed and variable pay. Metrics are continuing
to evolve with human capital and options issues at the forefront.
Investor pressures continue to push organizations to be value-led.
Value-led organizations are recognizing the need for and benefits
of education in value-related topics. Value-led organizations
understand the need to provide the platform where a changing
workforce can prosper. There is much work to be done and value-led
organizations are the ones that will take up and meet the
challenge. |
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7
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Value-Led
Organizations in Practice
Being value-led depends on leadership, but can only be successful
if it is embraced by every single employee in an organization.
The stimulus, and the decision which follows it, will be different,
and will come at a different time, provoke a different response,
and last for a different period, in every company. This chapter
looks at the ways in which a number of value-led companies
have responded to that challenge, exploring the examples of
ten organizations, including: Prudential Insurance; Kmart;
Bank One; Honda; Halma. |
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8
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Key
Concepts and Thinkers
Value-led pioneers and organizations have developed a language
which defines value concepts. Get to grips with this lexicon
through the ExpressExec glossary in this chapter, which also
covers key concepts and key thinkers. |
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9
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Resources
for Value-Led Organizations
There are many excellent reference works which describe value-based
philosophies, processes and techniques. This chapter identifies
the best resources in books, articles, magazines, and websites
on value concepts and on value-led organizations.
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10
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The
Steps to Making Value-Led Organizations Work
Every organization can be value-led. The steps to becoming
value-led require ethics and courage, which we call "leadership
will." An organization should reinforce its actions with the
appropriate measures and rewards. There are ten elements that
make value-led organizations work. |
