In a world where everything is changeable and development is rapid, values can contribute the necessary stability for people and organizations. Here we will explain how value-based management can give employees, managers and organizations an advantage in today's management environment.
What is value-based management?
Values-based management is about conducting leadership in the organization in accordance with some adopted values for the organization. In this way, the values of the company are activated in the concrete behaviors that are exhibited in everyday life. Depending on the values that the company has adopted or nurtured, the concrete management decisions will be marked by these when executing to achieve the company's objectives.
If an organization's leaders want to practice values-based leadership, it is incredibly important that the leaders have a thorough knowledge of the company's values and understand what they are based on, as well as how senior management sees these values embodied in the organization. The value-based management approach is most successful if top management is also aware that values must shine through in many of the organization's structures, such as recruitment of managers, incentive structures for all employees, customer alignment, production methods, etc. In this way, synergy and coherence will be created in the overall management of the organization.
Specifically, value-based leadership means that managers choose their management actions, make decisions, prioritize tasks and recruit employees with the organization's values as a hallmark. For example, if the organization has a value about “exercising due diligence,” it means that managers are expected to consider risks, prepare for plan failures, and deal with problems in the bud. The individual manager is expected to reflect on how they should act to lead in line with the company's values. In this way, the values set the framework for good management in the organization.
Read more: What characterizes a good leader?
Let's put some more words into what is really meant by values in a management context.
Understand the concept of values in a management context
Values in an organization are the actions and norms that are judged to be right or correct. In this way, it can be said that values are our guidelines for what actions and qualities are considered right and wrong. Our values act as our personal compass, our “true north” - the direction the needle points when we have to navigate the dilemmas, actions and decisions of daily life.
As a rule, the values of a company arise from fundamental elements in the emergence of the company. Values can come from a special human perspective that permeates the core mission of the organization. Values can stem from a visionary founder who has strong ideals for how the organization should be run and deliver value. Values can also develop from habits, sayings, and rituals that employees practice over an extended period of time.
You may want to read about: self-management.
To achieve success in values-based management, it is important to have clear values that are easy for the individual leader to relate to. Therefore, in one way or another, the company should define its values in a clear and clear way.
When defining your values, the process can be based on both a backward and forward-looking approach. One must answer the following questions:
- What values have been fundamental to lead the organization to where it is today?
- What values will be fundamental to ensure the survival and growth of the organization in the future?
A combination of these two approaches will typically provide the most solid foundations for implementing a values-based management approach in the organization. In this way, values will both reflect the stability and continuity that already exist in the organization, while providing the opportunity to drive change towards a stronger version of the company in the future.
Read more: Change Leadership: Succeed in an Ever-Changing World
Concrete example of value-based management
Here at Feedwork has we four valuesfrom which we try to run the company. These values reflect our success strategies, our human vision and the fact that values should guide our team. Our four values are:
- Feedback over ego
- Progression over perfection
- Relationships over profit
- Sustainability over consumption
When the values are translated into management behavior, this means, among other things, that we must:
- Seek feedback from customers and involve colleagues in our work
- Prioritize working pragmatically on solutions that work, rather than getting caught up in details
- Build and strengthen relationships with our customers and partners, even if it sometimes means loss of profits
- Choose sustainable solutions that work in the long term rather than one-off solutions
That's why you need to work with value-based management
The benefits of adopting a values-based approach to management are that you can scale out your management in a large organization working over large distances.
The values-based approach, when used correctly, can ensure a balance of freedom in task solving for the individual manager, while ensuring coherence in leadership across departments, teams and continents.
At the same time, value-based management encourages the individual manager to relate to concrete situations and gives the freedom to choose well-thought-out solutions. The manager's task is to relate to the individual situation and compare the options with the company's values in order to make the best possible decisions for himself and the company.
Read more: Situational Leadership: Adaptation as the Key to Effective Leadership
If the manager is lucky enough to work in an organization where there is a correlation between the personal values of the organization and the leader, the manager may also experience great motivation by feeling supported in making decisions on a basis that is consistent with the leader's personal values.
As an employee, a great advantage of values-based management is that you will experience continuity, recognizability and meaningful decisions from management that align with previous decisions in line with the values. At the same time, one becomes able to transfer the values to one's own self-management and work with everyday tasks. Employees will experience increased security as they understand and recognize the arguments for the decisions made in the organization.
Curious about how else to increase security? Read more: Psychological reassurance
Without “micromanaging” the individual leader, value-based leadership can help ensure the organization is on a safe path towards achieving its goals and visions. However, it requires a thorough effort and clear direction.
Challenges in Value-Based Management
Among the disadvantages of values-based management, we must mention that it requires a lot of clarity about the values of the organization's top management to succeed. Many managers are busy and guided by their habits and routines, which means values really need to be worked into the backbone to become a fixed part of their management compass. Think about how much time you have to deal with one thing or some new knowledge in order for it to affect your own behavior and reflection.
Examples of ways top management can ensure that the values are clear to the leaders of the organization:
- When managers are evaluated in their leadership, they must be compared with the values.
- When new leaders come to the organization, they must be introduced and their understanding of the values must be ensured.
- When managerial decisions are made that are not aligned with the values, it must be pointed out and an alternative direction must be put forward.
- Leaders should regularly be given the opportunity to train and reflect on values-based leadership.
How to Succeed in the Implementation of Value-Based Management
You may think, “That stuff about values, that sounds like something to us,” but unfortunately, creating success with values-based leadership is easier said than done. Here are some key points to address when it comes to implementing value-based management in your organization:
- Formulate some clear values
It is crucial that the values are relatively few, simple, and specific so that they are easy to remember and use in day-to-day management.
- Involve employees and managers in the work of formulating the values
Avoid imposing “amazing new values” on employees. Strike a balance between asking employees about what values they perceive as dominant and important in the organization, and the implementation of new values that will become important in the future.
- Train leaders to navigate with the help of the values of their leadership
In order for managers to translate the values into concrete actions, decisions and plans in the operation of the organization, it is necessary to build understanding and competence in the application of the values. This can be done in many ways, including case work, coaching and workshops in groups. Please note that a single training session related to the launch of the values is not sufficient. It is important to consider how new leaders should be trained and how to ensure that using the values in a busy everyday life remains a continuous focus for leaders.
- Use Values Actively in Your Recruitment
Consider how you can hire people with values that match the values of your organization. When there is a correlation between personal and company values, value-based management has the best opportunities for success. This involves considering how you hire people with values that align with the values of the organization.
- Communicate massively about the values and their importance in everyday life
Be persistent in your internal communication about the values and their application. This applies both in the internal communication of the company and in the role of the manager in communicating about and with the values to the employees in a frequent, varied and meaningful way.
The most important learning in management work occurs when we gain concrete experiences from reality and real encounters with living people in the organization. This means that you can read enough as much about different approaches to management, but the real and essential elements of learning arise in the encounter with reality. We hope this article has provided answers to some of the questions you had anyway. Good luck with your further work.
