Value-based management: learning to create high performing organizations by putting man before money

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Creating high-performing organizations: putting man before money

Contributed by Harald S. Harung, jr., PhD., Faculty of Engineering, Oslo University College, Norway

Corporations that put man before money outperform businesses whose primary goal is to make money. In high-performing, value-based organizations the first priority is on securing the well-being of the associates. The superior performance of value-based management includes substantially less absenteeism and less turnover, more innovation, and higher profit and return on investment.

In this course, graduating engineering and technology students at Oslo University College learn how to develop and maintain a value-based organization. The emphasis is on practices that have worked well on the average for almost a century.

During the spring semester of 2004 this course was taken as an elective by 30 graduating engineering and technology students – in spring 2005 all the third-year students (approximately 400) will take this course.

Core purpose of the course

The core purpose of the course is that the students should learn how to develop and maintain a value-based organization – an organizational culture that ensures high levels of performance and quality of life, both in the short and the long term, and in both good and difficult times.

Relevance of the course

The course has relevance for everybody since everybody operates within a wide range of organizations during their lifetime: businesses, schools, classes, family, circles of friends, networks of professionals, sports and social clubs... In addition, the principles of value-driven organizations are both timeless and industry-independent.

Pragmatic approach

Any knowledge is only valuable – indeed valid – to the extent that it can be put to practice. Accordingly, the strategy of this course has not been to present any sophisticated management philosophy. Rather, the approach has been to outline management practice and organizational behaviour that, over long periods of time, have been successful. The main textbook was the research-based work presented in Built to Last by Collins and Porras. The visionary companies they investigated had an average age of 92 years at the time of their study. These companies were from the USA, and included such well-known corporations as 3M (Minnesota Mining and Manufacture), Merck, General Electric, Hewlett-Packard, IBM, Johnson & Johnson, Motorola, Procter & Gamble, and Walt Disney. In addition, one Japanese company – Sony – was included.

This classic book was used extensively; together with excerpts from the author’s own book Invincible Leadership. Furthermore, a major feature of the course was guest lectures by top-level management from four value-based organizations in Norway:

  • NHO – Næringslivets Hovedorganisasjon, by Finn Bergesen, jr, CEO. (NHO is the main Norwegian employer organization).
  • G. C. Rieber & Co. AS, by Paul-Christian Rieber, CEO. Rieber is a company that has been practising value-based management for 125 years.
  • Manpower, by former CEO for Europe and the Nordic Region: Tor Dahl.
  • Tomra Systems ASA by Svànaug Bergland, Senior Vice-President, Organizational Development and Communications.

Why the Faculty of Engineering?

It may be asked why a faculty of engineering is pioneering value-based management – would it not be more natural for a business school to be in the forefront here? There are at least four possible and complementary reasons for this scenario:

  1. Engineers tend to be down-to-earth, practical people. They are concerned with what works in practice.
  2. Engineers are innovative people.
  3. Value-based management is about long-term thinking. This fits with the ethos of engineering.
  4. The Faculty of Engineering at Oslo University College is itself moving towards a value-based administration with a core purpose that "The students shall succeed" – at college as well as later on in life.

The high levels of equality evident in the Norwegian and Nordic national cultures may partly explain why the course is taught in Norway. This traditional equality means that the creation of organizational cultures with widespread self-management is quite natural, and several such organizations appear to have been in operation in Norway for many years (e.g., those listed above plus Tandberg, Orkla, Norsk Hydro, Håg, Frank Mohn, etc.).