Values for Decision MakingHarrison, Ch. 4

Fred Wenstøp

Fred Wenstøp 2

The concept of value

Values are subjective and belong to a person They cannot be proven or disproved It is useful to distinguish sharply between facts and values

We have beliefs about facts – what is We have feelings concerning values – what one ought to do

Values guide choice Hume: ”Reason is the slave of passion” Personal and organizational values permeate all decisions

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Hierarchy of values

Individual values Group values Organizational values = managerial values Societal values

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American individual values

1. Happiness Maximum results Satisfaction

2. Lawfulness3. Harmony4. Survival5. Integrity

Self-respect

6. LoyaltyPersonality is determined by the weights of these values

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Classification of values IValues and norms

It is useful to distinguish between values and norms Values

something we appreciate something we want as much as possible of England 1967: Preferential values

Norms standards of behaviour or rules that are regarded as unbreakable

• Not lying

• Legal rules

England: Normative values

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Business organisational values

Profits Survival Growth

According to Bernthal 1962

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Classification of values IIMeans and ends

Intrinsic value (end value, terminal value)Something that is of value in itself

• food

Instrumental value (Mean value)Something that is valuable because it lead to intrinsic

values• money

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Classification of values IIIRokeach 1973

H o ne s tyF a ilu ree vo ke s g u ilt

M ora lv a lu es

S ki llsF a ilu ree vo ke s sh a m e

C o m p e te n cev a lu es

In strum e nta l v a lueM o de s o f co nd u ct

S a lva tionP ea ceo f m ind

P e rson a lV a lu es

W or ldp ea ceB ro the r-h ood

S o cia lv a lu es

T erm ina l v a lueD e sira b le s ta tes

V a lue

Private business managers

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Classification of values IV

Performance measuresKey ratiosCost of capitalGrowthMarket shareStakeholder valuesEtc…

Core values (9 on top)IntegrityHonestyFairnessEqualityLoyaltyCommitmentRespectPrudenceTolerance

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Ranking of managerial valuesEngland 1966, Lusk & Oliver 1972

Business values Personal values Group values

Org. efficiency Achievement My company

Productivity Success Customers

Profit Creativity Managers

Org. growth Job satisfaction My boss

Ind. Leadership Individuality My subordinates

Employee welfare Money Employees

Social welfare Influence Co-workers

Prestige Owners

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Value judgement

A judgement is an ultimate categoryIt can only be evaluated by another judgement

Judgement addresses reality (facts) and valuePredictive judgement (facts)Evaluative judgement

Subjective value judgement remains the principal means for evaluating and selecting from numerous variables in each function of the decision-making process (Waddell 1970)