BASICS OF VALUE MANAGEMENT
Professor Jayashree Sadri
And
Dr Sorab Sadri
Jayashree Sadri and Sorab Sadri 2011
Before We Begin Let Us Be Clear
We are not speaking to young persons with a procedural mindset, with a law or an accounting
background.
We are addressing future industry leaders and CEOs who must learn to look at the larger picture
and view reality in holistic terms.
Jayashree Sadri and Sorab Sadri 2011
TO MAKE OTHERS BELIEVE IN YOU
BEGIN TO BELIEVE IN YOURSELF AND WORK HARD AT ACHIEVING
PERFECTION.
YOU ARE A VERY IMPORTANT MANAGER AND DO NOT FORGET THAT.
Jayashree Sadri and Sorab Sadri 2011
ACT YOUR PART
PLAN YOUR WORK AND THEN WORK YOUR PLAN
YOU HAVE RECEIVED A LOT FROM SOCIETY. NOW IS THE MOMENT TO RETURN
THAT DEBT.
NEVER COMPRIMISE ON YOUR VALUES
Jayashree Sadri and Sorab Sadri 2011
What is Management?
Management comes from the Italian word manager which means the art of handling horses.
Nowadays Management stands for the science of decision making and the art of decision
executing.
Jayashree Sadri and Sorab Sadri 2011
What is Value?
Value is a thought based concept that symbolizes a
set of beliefs held by a person, a group of persons
or an organization and by which the person, group
or organization is known for and stands by. It thus
forms the basis of subsequent managerial actions.
Jayashree Sadri and Sorab Sadri 2011
There are Two Connotations Of Value
The Subjective Notion
These are our values and this is what we stand for to be counted. We base our actions on these values.
The Objective Notion
This is the value of the person, process or product and this is the value added by virtue of particular action or decision.
Jayashree Sadri and Sorab Sadri 2011
WHAT IS VBM?
It is the practice of management such that the objective notion of value as well as the subject
notion of value are both achieved and organizational goals are met without giving up the humane touch.
Jayashree Sadri and Sorab Sadri 2011
THE PHILOSOPHY OF VCM?
Managerial Ethics forms the basis of corporate decisions.
Corporate Governance ensures that these decisions conform to set norms, accepted values and meet stated objectives.
The confluence of managerial ethics and corporate governance leads to achieving business excellence.
Jayashree Sadri and Sorab Sadri 2011
What is Ethics?
Ethics are a pattern of moral behavior of a person, a group of persons or an organization which are in conformity with some assumed
explicit stated or unstated beliefs. It is thus an activity based concept.
Jayashree Sadri and Sorab Sadri 2011
SOME FINER POINTS How an organization
reacts in the face of an external stimulus and how it relates to the social environment in respect of what is good or bad, right or wrong becomes the concern of BUSINESS ETHICS.
In taking a decision a
manager often faces an
ethical dilemma. How
he reacts in the face of
the dilemma and what
are his reasons for
doing so become the
concern of
MANAGERIAL
ETHICSJayashree Sadri and Sorab Sadri 2011
WHY IS THE CORPORATE WORLD SPEAKING OF ETHICS?
Every business needs the following traits in order to succeed.
Dependability Trust relationships Quality assurance Consistency Marketability
These five facets combine to permit a corporate entity to be accepted by stakeholders and so move towards business sustainability.Jayashree Sadri and Sorab Sadri 2011
IMPLICATION
Every ethical business has these five traits and these traits are visible in their day to day action as well as in what issues they stand for and what characteristics
they are known by. Hence being ethical becomes a business compulsion and especially so if the goal is
to approximate excellence.
Jayashree Sadri and Sorab Sadri 2011
The Logical Continuum
Every thing in an organization is related to the exercise of power.
The type of power is born out of the kind of authority exercised.
How this authority is sustained leads us to the study of ethics.
Jayashree Sadri and Sorab Sadri 2011
POWER
The ability to enforce a decision or to influence an outcome is called power.
On its own power is neither good nor bad but it is how you use it that makes a difference.
Jayashree Sadri and Sorab Sadri 2011
AUTHORITY
When a thief relieves you of Rs 5000 at gun point and when the income tax man deducts Rs 5000 at the end of the month from your salary, the impact is the same and
you are equally helpless. So what is the difference?
Jayashree Sadri and Sorab Sadri 2011
The Question of Legitimacy
The thief uses raw force that is not legitimate.
The income tax man is only doing his duty and his action is legitimate.
Power when legitimized becomes Authority.
Jayashree Sadri and Sorab Sadri 2011
Kinds of Authority [Max Weber]
Traditional : Culture Determined e.g. priest, parent and teacher.
Charismatic: Personality Determined e.g. a political leader, a guru and an ideologue.
Rational-legal: Structure Determined e.g. bureaucracy, status and hierarchy.
Jayashree Sadri and Sorab Sadri 2011
Effect of those in Authority
Why do some managers spread happiness wherever they go?
Why do some managers spread happiness whenever they go?
Jayashree Sadri and Sorab Sadri 2011
HUMAN ACCEPTABILITY
IT IS A BASIC HUMAN TRAIT THAT ETHICAL PERSONS ARE MORE READILY ACCEPTED BY CIVIL SOCIETY AND ALL
ITS CONSTITUENTS.
Jayashree Sadri and Sorab Sadri 2011
Business EthicsSoul Based View
Improve yourself and thereby make others ethical. Everything depends on how the heart-soul-mind
function.
Mind Based View
Hold on to your values and respond to external stimuli ethically. There is always a question of rational-ethical choice. You are a manager not a
missionary.
Jayashree Sadri and Sorab Sadri 2011
Managerial Ethics
When faced with a dilemma a manager can respond in any one of the three modes of ethical conduct.
Non Consequential Consequential Acceptance
Jayashree Sadri and Sorab Sadri 2011
NON CONSEQUENTIAL MODE
Some things are right or wrong irrespective of the person involved or the circumstances. {Immanuel Kant}
When a moral issue is at stake the minority of one is enough to make a difference.
{Georg F W Hegel}
Jayashree Sadri and Sorab Sadri 2011
CONSEQUENTIAL MODE
Personalized View
If I take this decision what is in it for me? How will I be affected?
Communalized View
Will it be of benefit to all? Will the greatest good to the greatest number be made possible?
Jayashree Sadri and Sorab Sadri 2011
ACCEPTANCE MODE
If I can discuss the reason for my decision publicly then that decision is ethical.
[S. Sadri]
If others think I am acting ethically nothing else matters.
[S. Jayashree]
Jayashree Sadri and Sorab Sadri 2011
Ethical Modes & Kinds Of Managers
Consequential : Usually successful, opportunistic and highly materialistic.
{the ends justify the means}Non Consequential: Trail blazers, history makers and
true leaders.{always concentrate on the means, ends will follow}Acceptance: Yes men, apple polishers and the general
mediocrity.{cover your back and damn the rest or tick mark an
activity on your list and may the quality go to blazes}
Jayashree Sadri and Sorab Sadri 2011
Jayashree Sadri and Sorab Sadri 2011
VALUE AND ORGANISATIONS
When an organisation looks upon value in the subjective sense it is said to be value based.
When an organisation looks upon value in the objective sense it is said to be value driven.
When an organisation looks upon value in both senses simultaneously it is said to be value centered.
Jayashree Sadri and Sorab Sadri 2011
Needs of Value Centered Organizations
A value centered organization aims to attain organizational excellence.
This organizational excellence is like a horizon one moves towards.
Hence excellence must be converted into business sustainability.
For this having a system of good corporate governance is imperative.
What is Corporate Governance
Systems, procedures and institutions that ensure that management acts in the best interests of the
owners (shareholders)
There is an ongoing debate about whether it should be shareholders’ interest or all
stakeholders’ interest (including employees, customers environment and community at large)
that the management should serve.
Jayashree Sadri and Sorab Sadri 2011
What is Excellence?
Excellence is defined as a quality that anything (person, function or organization) has and which is
of outstanding ability or possesses unparalleled merit.
Jayashree Sadri and Sorab Sadri 2011
How To View Excellence? In management sciences, in order to be meaningful,
the term excellence has to be measurable. If not it will remain vague and abstract. Hence we will reduce it in terms of measurable units of
· Quantity
· Quality
· Cost
· Time
Jayashree Sadri and Sorab Sadri 2011
Business Excellence is a macro concept and deals with excellence of the entire industry within a given market e.g. steel, cement, mutual funds,
general insurance etc.
Business Excellence
Jayashree Sadri and Sorab Sadri 2011
Jayashree Sadri and Sorab Sadri 2011
Organizational Excellence
Organizational Excellence is a micro concept and deals with excellence of a unit, a firm or an
institution which exists within a given industry e.g. Tata Steel, Infosys, and Hindustan Unilever
Limited.
THE LOGICAL CHAIN An environment of Business Ethics enables
Managerial Ethics to flourish. Managerial ethics facilitates good corporate
governance to be followed. Ethics and Governance combine to create
conditions for achieving business excellence. Excellence remains a horizon to be moved
towards and must be concretized in terms of business sustainability.
Jayashree Sadri and Sorab Sadri 2011
Jayashree Sadri and Sorab Sadri 2011
This is the logical continuum of our argument.
Thank You Very Much
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