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 Ethics
Soul 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} Jayashree Sadri and Sorab Sadri 2011

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

Basics of value management

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