basics of value management

BASICS OF VALUE MANAGEMENT

Professor Jayashree Sadri

And

Dr Sorab Sadri

Jayashree Sadri and Sorab Sadri 2011

Before We Begin Let Us Be Clear

We are not speaking to young persons with a procedural mindset, with a law or an accounting

background.

We are addressing future industry leaders and CEOs who must learn to look at the larger picture

and view reality in holistic terms.


TO MAKE OTHERS BELIEVE IN YOU

BEGIN TO BELIEVE IN YOURSELF AND WORK HARD AT ACHIEVING

PERFECTION.

YOU ARE A VERY IMPORTANT MANAGER AND DO NOT FORGET THAT.


ACT YOUR PART

PLAN YOUR WORK AND THEN WORK YOUR PLAN

YOU HAVE RECEIVED A LOT FROM SOCIETY. NOW IS THE MOMENT TO RETURN

THAT DEBT.

NEVER COMPRIMISE ON YOUR VALUES


What is Management?

Management comes from the Italian word manager which means the art of handling horses.

Nowadays Management stands for the science of decision making and the art of decision

executing.


What is Value?

Value is a thought based concept that symbolizes a

set of beliefs held by a person, a group of persons

or an organization and by which the person, group

or organization is known for and stands by. It thus

forms the basis of subsequent managerial actions.


There are Two Connotations Of Value

The Subjective Notion

These are our values and this is what we stand for to be counted. We base our actions on these values.

The Objective Notion

This is the value of the person, process or product and this is the value added by virtue of particular action or decision.


WHAT IS VBM?

It is the practice of management such that the objective notion of value as well as the subject

notion of value are both achieved and organizational goals are met without giving up the humane touch.


THE PHILOSOPHY OF VCM?

Managerial Ethics forms the basis of corporate decisions.

Corporate Governance ensures that these decisions conform to set norms, accepted values and meet stated objectives.

The confluence of managerial ethics and corporate governance leads to achieving business excellence.


What is Ethics?

Ethics are a pattern of moral behavior of a person, a group of persons or an organization which are in conformity with some assumed

explicit stated or unstated beliefs. It is thus an activity based concept.


SOME FINER POINTS How an organization

reacts in the face of an external stimulus and how it relates to the social environment in respect of what is good or bad, right or wrong becomes the concern of BUSINESS ETHICS.

In taking a decision a

manager often faces an

ethical dilemma. How

he reacts in the face of

the dilemma and what

are his reasons for

doing so become the

concern of

MANAGERIAL

ETHICSJayashree Sadri and Sorab Sadri 2011

WHY IS THE CORPORATE WORLD SPEAKING OF ETHICS?

Every business needs the following traits in order to succeed.

Dependability Trust relationships Quality assurance Consistency Marketability

These five facets combine to permit a corporate entity to be accepted by stakeholders and so move towards business sustainability.Jayashree Sadri and Sorab Sadri 2011

IMPLICATION

Every ethical business has these five traits and these traits are visible in their day to day action as well as in what issues they stand for and what characteristics

they are known by. Hence being ethical becomes a business compulsion and especially so if the goal is

to approximate excellence.


The Logical Continuum

Every thing in an organization is related to the exercise of power.

The type of power is born out of the kind of authority exercised.

How this authority is sustained leads us to the study of ethics.


POWER

The ability to enforce a decision or to influence an outcome is called power.

On its own power is neither good nor bad but it is how you use it that makes a difference.


AUTHORITY

When a thief relieves you of Rs 5000 at gun point and when the income tax man deducts Rs 5000 at the end of the month from your salary, the impact is the same and

you are equally helpless. So what is the difference?


The Question of Legitimacy

The thief uses raw force that is not legitimate.

The income tax man is only doing his duty and his action is legitimate.

Power when legitimized becomes Authority.


Kinds of Authority [Max Weber]

Traditional : Culture Determined e.g. priest, parent and teacher.

Charismatic: Personality Determined e.g. a political leader, a guru and an ideologue.

Rational-legal: Structure Determined e.g. bureaucracy, status and hierarchy.


Effect of those in Authority

Why do some managers spread happiness wherever they go?

Why do some managers spread happiness whenever they go?


HUMAN ACCEPTABILITY

IT IS A BASIC HUMAN TRAIT THAT ETHICAL PERSONS ARE MORE READILY ACCEPTED BY CIVIL SOCIETY AND ALL

ITS CONSTITUENTS.


Business EthicsSoul Based View

Improve yourself and thereby make others ethical. Everything depends on how the heart-soul-mind

function.

Mind Based View

Hold on to your values and respond to external stimuli ethically. There is always a question of rational-ethical choice. You are a manager not a

missionary.


Managerial Ethics

When faced with a dilemma a manager can respond in any one of the three modes of ethical conduct.

Non Consequential Consequential Acceptance


NON CONSEQUENTIAL MODE

Some things are right or wrong irrespective of the person involved or the circumstances. {Immanuel Kant}

When a moral issue is at stake the minority of one is enough to make a difference.

{Georg F W Hegel}


CONSEQUENTIAL MODE

Personalized View

If I take this decision what is in it for me? How will I be affected?

Communalized View

Will it be of benefit to all? Will the greatest good to the greatest number be made possible?


ACCEPTANCE MODE

If I can discuss the reason for my decision publicly then that decision is ethical.

[S. Sadri]

If others think I am acting ethically nothing else matters.

[S. Jayashree]


Ethical Modes & Kinds Of Managers

Consequential : Usually successful, opportunistic and highly materialistic.

{the ends justify the means}Non Consequential: Trail blazers, history makers and

true leaders.{always concentrate on the means, ends will follow}Acceptance: Yes men, apple polishers and the general

mediocrity.{cover your back and damn the rest or tick mark an

activity on your list and may the quality go to blazes}



VALUE AND ORGANISATIONS

When an organisation looks upon value in the subjective sense it is said to be value based.

When an organisation looks upon value in the objective sense it is said to be value driven.

When an organisation looks upon value in both senses simultaneously it is said to be value centered.


Needs of Value Centered Organizations

A value centered organization aims to attain organizational excellence.

This organizational excellence is like a horizon one moves towards.

Hence excellence must be converted into business sustainability.

For this having a system of good corporate governance is imperative.

What is Corporate Governance

Systems, procedures and institutions that ensure that management acts in the best interests of the

owners (shareholders)

There is an ongoing debate about whether it should be shareholders’ interest or all

stakeholders’ interest (including employees, customers environment and community at large)

that the management should serve.


What is Excellence?

Excellence is defined as a quality that anything (person, function or organization) has and which is

of outstanding ability or possesses unparalleled merit.


How To View Excellence? In management sciences, in order to be meaningful,

the term excellence has to be measurable. If not it will remain vague and abstract. Hence we will reduce it in terms of measurable units of

· Quantity

· Quality

· Cost

· Time


Business Excellence is a macro concept and deals with excellence of the entire industry within a given market e.g. steel, cement, mutual funds,

general insurance etc.

Business Excellence



Organizational Excellence

Organizational Excellence is a micro concept and deals with excellence of a unit, a firm or an

institution which exists within a given industry e.g. Tata Steel, Infosys, and Hindustan Unilever

Limited.

THE LOGICAL CHAIN An environment of Business Ethics enables

Managerial Ethics to flourish. Managerial ethics facilitates good corporate

governance to be followed. Ethics and Governance combine to create

conditions for achieving business excellence. Excellence remains a horizon to be moved

towards and must be concretized in terms of business sustainability.



This is the logical continuum of our argument.

Thank You Very Much

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