What is Value-Based Management?

Simply put, VBM is a business philosophy and management system for competing
effectively in the global marketplace, based upon the inherent value, dignity and
empowerment of each person-particularly each employee, customer and supplier. As a
customer-focused "service" philosophy, Value-Based Management (VBM) is built
upon a shared set of core values. As a management system, VBM offers a logical
framework for designing a company's structures and processes to instill an ownership
culture that enables the organization to carry on its mission most effectively.

Value-Based Management follows the market-oriented theory of economic justice

first advanced by the ESOP inventor Louis Kelso and the philosopher Mortimer
Adler. The Kelso-Adler concepts underlying VBM reveal a systematic approach for
enabling each member to: 1) participate fully as a worker and owner in the company,
2) receive a fair distribution based on what he or she contributes to the company as a
worker and owner, and 3) organize with other members to correct problems or defects
in the system affecting participation and distribution. (See chapters 4 and 9 in Curing
World Poverty: The New Role of Property, John H. Miller, ed., Arlington, VA: Center
for Economic and Social Justice, 1994.)

Value-Based Management marries the quality, educational and participation aspects

of Total Quality Management and Open Book Management, with the equity and
ownership concepts underlying employee stock ownership plans (ESOPs). VBM
provides a structured system for diffusing power down to the level of each person in
the company. VBM also offers workers an opportunity to participate as first-class
shareholders in the company's equity growth, and in monthly and annual profits on a
profit center basis.

A VBM system typically incorporates an employee stock ownership plan (ESOP),

individual and team performance feedback (i.e. frequent and formula-based cash
profit sharing), ownership education and sharing of financial information, and
structured participatory management and governance. VBM also reinforces within
ongoing information and education programs, a broad understanding by all employee-
shareholders of the interdependency among every person, department, and profit
center in serving the customer and competing in the marketplace.

Experience has shown that where reinforced by a Value-Based Management system

and culture of ownership, workers become empowered to make better decisions,
discipline their own behavior, and work together more effectively as a team. Because
each person contributes, risks and shares as an owner, as well as a worker, VBM helps
unite everyone's self interest around the company's bottom-line and corporate values

n July, a group of Atlanta business leaders spent time at the Marine Recruit Depot at Parris Island in
South Carolina. The purpose of our trip, organized by the Center for Ethics and Corporate Responsibility,
was to learn about the Marines' values-based training strategy. As participants in that group, we were
moved by learning how the Marines' foundational values of "Honor, Courage and Commitment" are
integrated into nearly every aspect of basic training — from the classroom to carefully scripted briefings
during breaks in rigorous physical exercises in the field.

We want to share the inspiring lessons we took away from the Marines' values-driven management
philosophy. We believe they help every organization achieve its goals.
Based on our time spent with the officers and recruits at Parris Island, here are four battlefield-tested
disciplines for values-based leadership:

A Legacy of Values

Employees want to be a part of something bigger than themselves. The Marines use their history to
connect recruits and veterans with a long legacy of proud, honorable service to the nation and to fellow
Marines. In fact, values-based leadership is simply reinforcing what the Marines have been practicing,
training and enforcing since the birth of the Corps in 1775.

The following questions may help your organization become more intentional about managing by values:
What are the founding principles and values of your organization? What do they mean to current
employees? How have they changed? In what ways can you create shared meaning and pride in your
organization for employees?

Leadership Processes from the Top

The original Commandant's order to create the Marines' Values Based Program came from General
Charles C. Krulak. This order codified the core values of "Honor, Courage and Commitment," and spelled
out the management processes for integrating values throughout the corps. The original process is
broken down into three steps:

1. Initial entry training — every Marine is formally instructed on the core values as soon as they
enter the service

2. Reinforcement education — a comprehensive listing of values education during advanced

training courses

3. Sustainment education — the directive that the core values need to be demonstrated in the daily
course of events by all leaders

The most effective values-based management programs in the private sector also have an enterprise-
wide process of training, education and reinforcement. The key, however, is to have a CEO — like the
Commandant — who is the standard bearer for your organization's values, modeling the behavior
expected of others.

Remembering, Retelling and Reliving Your Values

Dr. Walter Fluker, renowned ethicist and author, says that storytelling is one of the principle roles leaders
must play to advance values based management. He advises executives to remember, retell, and relive
stories about the organization's character and values to create a shared consciousness and commitment
by employees.

The Marine Corps name for this is "tie-ins," a specific reference to tying-in words and thoughts with
actions. During a break from a grueling training exercise, our group of Atlanta executives listened as a
sergeant told a story in great detail about the heroism of a fellow Marine killed in action and awarded the
Congressional Medal of Honor posthumously. The recruits responded verbally by relating the fallen
Marine's actions on the field to the core values.

What stories do you need to remember, retell, and relive within your organization?

Values Management as a Force Multiplier

The military was the first to develop the idea of a force multiplier, an attribute that significantly increases
the effectiveness of a group. The success of the troops can be boiled down to understanding that one
plus one equals much more than two and, at the same time, the chain is only as strong as the weakest
link.

Examples of companies where values-based leadership is a force multiplier can be found inFortune's
annual list of Best Places to Work. The companies selected for the list excel in building trust in leadership
that expands, or multiplies, to trust between co-workers. This creates a more supportive and productive
work environment, and produces exceptional business results.

An annual Gallup poll asks Americans to rank their confidence in various institutions. In 2010, the military
received the highest marks from the public with an approval rating of 76%. In contrast, 19% of Americans
expressed confidence in big business. The Marine Corps earns this confidence through its commitment to
country and to fellow Marines, a promise it keeps due to a tangible, management-oriented process. This
process can be replicated by other organizations by setting goals, establishing systems, and driving
behavior and performance through values based leadership.

J.R. Hipple, M.S., is CEO of Hipple & Co. Reputation Management, a management communications
consulting firm, and chairman of the board of governors of the Center for Ethics & Corporate
Responsibility at Georgia State University. Steve Olson, Ph.D., is the director of the Center for Ethics and
Corporate Responsibility at Georgia State University, and an organizational development and leadership
consultant to Fortune 500 companies.

Why should we work using value-based management?

The foundation of an organization is the values that it is based on, both the financial and the ethical aspects.
This means that this foundation is always in motion and influenced by both internal and external moods,
norms of society and tendencies. In the future, the effect of the changes will be greater, and their frequency
will increase drastically. Therefore, it will become crucial to the management of organizations to be able to
change foundations and communicate the new values.

It is well known that the management of companies see the employees as an important resource. Many find
it the most important resource, but if we look at the inner values, it does not matter at all how much
competency the employees have. We need to find the values that are central to our well-being, and through
that create the conditions that will make the employees want to stay in the organization in the future. The
company’s placement in relation to social aspects will also increase. Just think of Shell and what it ended up
meaning to them that they wanted to sink an old oilrig. This is an expression of a value that makes an
enormous difference. What do we do when it comes to alcohol, minority workers, sports clubs, etc.?

So, it is not only a question of inner values and norms, but also of our attitude towards a variety of other
questions. We should not only relate to how the company is run, but also to the surrounding environment.

Learn to use the value foundation as a valuable motivating factor to attract and keep important resources.

As a participant you will learn

• To identify your present value foundation

• To put the values into perspective, so they can be analyzed separately
• To translate the values into action
• To realize which conditions are needed for the process to succeed.
Values are the foundation of the company
The notion of value is becoming broader and broader. People claim that the typical and well-known values
will not be values in the time to come for neither the employee, nor the company. These will only be
measuring points, undoubtedly important measuring points.

The seminar is offered as a two-day internal training.

So, how do we translate the values into action, so they do not just become fancy words and empty phrases,
as it so often happens? “Altarpieces”, hanging on the walls of the company, only able to make employees
smile because their own everyday life is so very different. Inner Leadership International has developed a
simple technique that, through the use of four elements, can map the preconditions needed to turn the
processes into reality and that show what consequences a given action has for other aspects. This method
makes it possible to work out factual plans of action.

We wish to develop professionally and personally. We demand more and more of ourselves and each other,
and as always we focus on the result, the “bottom line”. We accept that it is one of the most important
measuring points in our professional life. Maybe we can achieve much better results, also financially, if we
act in a larger perspective. Remember, the measuring points are the value set of today.

Today, most employees focus on the way their professional life is. They have demands to their professional
life, their job, their co-workers and not least to the management. When things do not work out as expected,
everybody speaks of motivation - or the lack thereof.

The tendency of the last years has been for employees to demand more and different things from their
workplace than before. Inner Leadership International believes that this is only the beginning. Companies
are, little by little, beginning to compete with their value set as an image profile.

Get experience-based answers to

• What image and set of values mean when it comes to attracting and keeping employees
• Why the company and the employees misunderstand each other
• What relation notions such as trustworthiness, dignity and morality in practice.

This training is for management groups who feel that employees make the difference between success and
failure, and who want to get the tools to turn intention into insight and through that into action.

After the training, it is highly recommended that participants have four to six half-day processes in order to
hold onto the values and make sure that the company is developing in the wanted direction. This will ensure
more benefit from the training.

Values are the competition parameter of the future