The challenges business leaders face do not have a precedent in recent history. They’re most usefully compared to the challenges of the dawn of the industrial revolution. Both the theory and practice of management have become dated and need to be radically altered to adapt to the socio-economic changes of the 21st century.
The ideas of management by instruction and management by objective are based on the conviction that people are driven to act mainly by fear and greed. We now know that isn’t exactly true. People don’t want to defer into some distant future their dreams of a job they can do with passion in an atmosphere of understanding and kindness. It’s time management practices were aligned with the expectations of shareholders and workers in order better to achieve strategic goals.
Managers usually focus on quantifiable metrics, such as profit, budgets, technology, neglecting the humanistic aspect of business, which is more abstract and therefore unpractical. A company’s basic values like the values adopted by people are usually a closed set of timeless ideas that have real meaning to the members of the organization and help with the accomplishment of short-term goals or a strategy. Using values every day as management tools creates groundwork for a new concept of management – management by values. Permeating every layer of a company as well as how it relates to the outside world with values is humanized management, which creates a new dimension of a company’s operations. Management by values is a philosophy. But it’s also practical action whose goal is to focus on the practice of essential values within a business as well as aligning them with the mission and future vision of a company.
Aren’t values a luxury in the business world? Isn’t business mainly about making money? Yes, profit is a goal, but not the most important one.
The urge to maximize profit at any cost was the source of the spectacular bankruptcies and collapses of the early 21st century. Enron, WorldCom, Tyco, Lehman Brothers, and Siemens were the darlings of investors until it turned out they had falsified their earnings figures or engaged in corrupt business practices. The managers at those companies were greedy and that’s what made them behave immorally or even criminally. Many of them have been sentenced to a number of years in prison. Greed and the drive of companies to maximize their profits have caused the last two serious economic crises of the past decade. They’ve deprived tens of millions of people of work around the world, caused bankruptcies, and caused thousands of companies to report losses. Now many countries, even the richest and most developed are facing a sovereign debt crisis that threatens their futures.
These examples of failure show how important overarching values are to economic growth and to society. Values refer to people, but also to procedures and behavioral norms. They are the measuring stick for internal regulations as well as for a company’s products or services.
Values are just as important in a person’s private life as in the life of a business; values determine character in a person and corporate culture in a company; values allow a person to live with dignity and die in peace; they give companies a shot at immortality. Values provide internal balance amidst turbulence and propel people to pursue excellence.
Management by values addresses the weaknesses of other management methods, especially those focused exclusively on earnings. Consistently practiced values have a magical effect on a company’s corporate culture, giving that company a permanent competitive advantage. Human capital is the deciding factor in business success today. Management by values enables a business to unlock its workers’ full potential. We are in the midst of a war for talent. A company’s values are the best argument for choosing one job offer over another. The values by which managers aspire to run a business are the bridge transmitting talent. Values enable businesses to grow and be profitable in accord with the environment, with worker preferences, as well as with the expectations of stakeholders and owners. It’s the ordinary-extraordinary who, using values as a roadmap, create incredible businesses.