Management by values

From CEOpedia | Management online

Management by values (MBV or Value Based Management) ​​creates the framework for today's leaders and managers. MBV method is important in the management of organizations in a complex environment. The issue of company values was ​​previously considered "too soft" to be turned into a serious approach to management, now it turned into a central part in discussions about strategy and organizational changes. Focusing on the core values (key, most important values) ​​has become necessary to carry out organizational change.

The values ​​should be the focus on issues related to organizational change, as well as in the whole practice of management. In some of the world's emerging economies, management by values is quickly becoming a major force for the rebuilding of sustainable and competitive culture.

Practice of managing by values

Managing by values can be defined as both a philosophy and practice of management, it focuses on the key values ​​of the organization and their consistency with the objectives.

Scientific studies have confirmed that the key to understanding the behaviour of complex systems is to understand the values ​​that each of them contains. System values ​​are motivators that shape the behaviour of individuals, organizations and society.

Management by values ​​for the employees involves working with the process of meeting the needs and their dignity at the same time. The company forms self-control teams and personal self-control environment. It raises the quality of work and increases the identification and loyalty to the company.

Managing by values uses following tools:

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Axes of management by values theory

The theory of management by values is ​​based on three axes:

  • Economic and pragmatic values ​​are necessary to maintain and connect variety of organizational subsystems.These relate to: performance, performance standards and discipline. These values ​​have an impact on activities such as planning, ensuring quality and accounting.
  • Ethical and social values common to all employees determine how people behave in groups. This is related to human behaviour, including relationships and social values ​​such as honesty, respect, integrity and loyalty.
  • Emotional and development values are the basis for creating new opportunities for action. These are related to: freedom, happiness and confidence. Examples of such values ​​are creativity, creating of concepts, life, self-awareness, self-confidence, influence, adaptability, flexibility.

Three-axis model of value-based management focuses on finding the key organizational values. It offers a chance to build a culture in harmony with these values ​​and strategic objectives.

Managing of core values today

Since the 90s the importance of economic and pragmatic values ​​decreased, while the importance of ethical values ​​has increased considerably. Moreover, among professionals, especially in the growing service sector, there can be seen more emphasis on the values ​​associated with the development and emotions. These values ​​are still critical elements to attract and retain top-class professionals, as employees are better educated, more mobile and require immediate satisfaction. Today the trust, rather than control, becomes increasingly important in the workplace.

Today organizations are becoming increasingly global, diverse, flat, and flexible. Managers must thus realize the importance of understanding and managing the value of the teams, departments and cross-organizational units. Leaders must develop the ability to manage complexity, and this includes understanding and using core values ​​at the organization and individual level. Values are also important part of the extended enterprise model of company development.


Examples of Management by values

  • Google: One of the most renowned examples of management by values is Google’s "Ten Things We Know To Be True". These ten core values guide their decisions and help them stay focused on their mission. Values such as "Focus on the user and all else will follow" and "You can make money without doing evil" are the cornerstones of their success.
  • Nike: Nike’s mission statement emphasizes the importance of its core values, which include "creativity, innovation, and inspiration". This statement is reflected in its products and culture, and serves as a reminder that the company is committed to providing quality products that are inspired by athletes’ needs.
  • Zappos: Zappos’ mission statement is "Delivering WOW through Service". This statement reflects the company’s commitment to providing exceptional customer service and creating an enjoyable shopping experience for its customers. The company has also committed to treating its employees with respect and recognizing their contributions to the success of the company.
  • Apple: Apple’s mission statement is "Think Different". This statement reflects the company’s commitment to being innovative and challenging the status quo. Apple has also implemented core values such as "Simplicity is the ultimate sophistication" and "We believe in the simple, not the complex", which guide its decisions and operations.

Advantages of Management by values

Management by values (MBV or Value Based Management) is an approach to management that emphasizes the importance of company values in the decision-making process. The following are the advantages of MBV:

  • MBV creates an opportunity to set a clear direction for the organization, by determining which values should be the foundation of the organization. This allows employees to understand the importance of their roles and how they should prioritize tasks to align with the company's values.
  • MBV can help to foster a sense of purpose and meaning in the workplace, as employees can now connect their actions with the company's values and goals. This encourages greater engagement and motivation in the workplace.
  • MBV can help to increase employee loyalty and commitment, as employees are now connected to the company's values and goals. This leads to increased morale and higher productivity.
  • MBV can help to create a sense of cohesiveness and unity among the workforce, as they now share a common set of values and understand how their individual actions are contributing to the success of the organization.
  • MBV can help to attract and retain top talent, as potential employees are more likely to be drawn to an organization that has a clear set of values and goals.
  • Finally, MBV can help to create a culture of trust between management and employees, as the company's values and goals are clearly communicated, and employees have a better understanding of how their work is contributing to the success of the organization.

Limitations of Management by values

Management by values (MBV or Value Based Management) has several limitations that have to be taken into account when implementing it. These limitations include:

  • It is difficult to measure the effects of MBV, making it difficult to prove that MBV is effective.
  • It is difficult to maintain consistency of values across the organization. Without consistency, it is difficult to ensure that all employees are making decisions based on the same core values.
  • It is difficult to ensure that employees are making decisions based on the core values when faced with complex, real-world scenarios.
  • It is difficult to ensure that values are continually evolving to keep up with the changing environment.
  • It is difficult to ensure that all levels of the organization understand and adopt the core values.
  • It is difficult to ensure that core values are embedded into decision-making processes and organizational culture.

Other approaches related to Management by values

Management by values has become an important part of modern management approaches. Other related approaches include:

  • Corporate Governance: Corporate governance involves the set of processes and structures by which organizations are directed and controlled. It is based on the concept of accountability, responsibility and integrity, and applies to all levels of the organization. It also encompasses issues such as risk management, performance evaluation, and corporate social responsibility.
  • Corporate Social Responsibility: Corporate social responsibility (CSR) is a concept by which organizations take into account the ethical, environmental and social considerations in their decision-making processes. It involves developing policies and procedures that are both socially beneficial and economically viable.
  • Strategic Management: Strategic management is another related approach which focuses on the development of long-term plans and strategies for an organization. It involves the analysis of the external environment and the formulation of strategies in order to achieve organizational objectives.

In conclusion, Management by values is one of the primary approaches to modern management, and it is related to other concepts such as corporate governance, corporate social responsibility and strategic management. These concepts are all related and should be taken into consideration in order to create a successful and sustainable organization.


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