Managing Value‐Based Organizations

Citation

Cromb, D. (2007), "Managing Value‐Based Organizations", Leadership & Organization Development Journal, Vol. 28 No. 3, pp. 293-294. https://doi.org/10.1108/01437730710739710

“Value” in a value‐based organisation is a unit of worth that suppliers (any giver) and customers (any receiver) contribute as their part of a value transposition. The ability of one party to deliver what the other values qualifies the former to engage with the latter in a value exchange. Both parties judge what is of value to them against criteria that are both similar and different. And the value exchanged is of equal worth. So this book is not about a “values” based organisation (either personal or organisational), nor is it about some type of monetary value, nor about making employees feel valued.

It is not until chapter 4 that an explanation is given as to what the term “value‐based organisation” means. Value is exchanged through the value transposition, which is the pursuit of and commitment to the continuous exchange of equal worth between a supplier and a customer. A value‐based organisation is one that is committed to delivering this value to all of its stakeholders, not just to some of them, and to delivering that value to at least the same extent or degree that it receives it all of the time.

Transpositions differ from social exchanges in three ways. A transposition has a clear parity of exchange, where what is given equals what has been received. Because of this parity, a transposition is not a transaction as a transaction is simply an exchange with no implicit or explicit equality in it. A transposition also goes beyond a traditional relationship – a relationship can end but a transposition is characterised by an unwavering commitment to go on delivering value to the person or organisation with which the last exchange took place.

The authors compare and contrast several organisational types. For example, the traditional organisation exists to maximise control and minimise costs through its functions or products organisation‐wide on a permanent basis: a value‐based organisation exists to maximise flexibility and innovation at lowest cost through relationships that are network‐wide on a permanent but self‐adjusting basis.

The authors believe that managers today have little understanding of why there is so much change in the world of work or what they can do about it. Answers to the “why” are essentially covered in parts 1 and 2 of the book. Part 1 comprises four chapters and examines organisational history, looking at why work as organised and managed the way it is from the sixteenth century to the present day. Current organisations are examined, as is the “horizontal revolution” currently taking place. The value‐based organisation is also described. Part 2 examines how organisations have manipulated these traditional practices through look at three “myths”: the myths of rightsizing, competitive advantage, and the balanced scorecard. The practical implications of value‐based principles are examined in part 3, from the viewpoints of organisations, managers, employees, and human resources managers.

I found the first three chapters very interesting, as the authors have drawn on social and economic history sources to describe how the organisation and management of work has changed from the pre‐Industrial Revolution period in England to the post‐Industrial Revolution period in America – a span of about 400 years. The “traditional” organisation that grew out of the latter not only changed the way in which work was organised and managed but served also as a template for the rest of the industrialised world. The term “horizontal revolution” is used to describe current approaches to change – horizontal because organisations that pass through it often are referred to as flat and the process through which the flatness has taken place as downsizing, rightsizing, or restructuring. It is a collection of smaller revolutions, each contributing its own “chaos”.

Part 3 is the “so what” section of the book. To survive the upheaval, the authors believe that organisations need to be deliberately designed according to value‐based principles. Managers need to better understand what it is that each employee values and to sincerely engage with them in order to increase the level of this value to them. Employees, who now are in effect independent contractors, are now accountable to themselves for their own employability and have to manage themselves to the same extent as they would have been managed by someone else in a traditional organisation. HR managers, whose traditional roles disappear in a value‐based organisation, now are manages of value partnerships, identifying and changing organisational behaviours that impede value exchange and helping staff to become transpositional networkers.

The book is easy enough to read once you get into it but it needs commitment as there are only six figures or tables to break up the text. And it is unusual in that what the book is really about is not completely revealed until the fourth chapter. The chapter summaries are helpful although some could be more succinct. Nominating a target audience is problematic: given the structure of the book (and its 38 page bibliography) I would nominate executives and academics, notwithstanding that there is contained here a valuable message for all organisational staff. The subject matter cries out for a ten‐page article in this journal in order to convey the message in a more succinct way, and to a wider audience.