JAME: The Journal of Applied Management and Entrepreneurship

Value Driven Management: Maximizing
Value Over Time and Organizational Success

Gareth S. Gardiner, Nova Southeastern University
Randolph A. Pohlman, Nova Southeastern University


Executive Summary

Value Driven Management is a comprehensive and integrative theory of management which holds that organizational decision-makers must juggle and balance eight value drivers in making decisions that will maximize the value of their organization—broadly defined—over time. It is an evolutionary outgrowth of market-based management as it has been developed at Koch Industries and other firms. Value Driven Management rests upon 11 philosophically and organizationally sound assumptions and implementing it successfully in an organization and in one's personal life requires a high degree of commitment and effort over time. When Value Driven Management is integrated into organizational and personal decision-making, superior organizational performance and greater personal happiness are almost certain to result, particularly in the long run.


Introduction

For many years business schools in this country have taught their students that the only purpose of a company is to be profitable now and that the only value that really matters in a firm's existence is the maximization of shareholder wealth, also now. The Wall Street analysts have reinforced business school doctrine: the analysts place uniform and unilateral emphasis upon the importance of a company's earnings, and woe become the CEO of a publicly traded firm who defies their wisdom. He or she is likely to have a very short tenure at the helm if the firm's earnings do not meet Wall Street's expectations, now. Even one disappointing financial quarter can doom a CEO's career. It is not surprising, in the light of these pressures, that the executives, managers, and employees of many of these companies often make decisions that may prop up the bottom line in the short run, but damage their organizations in the long run. Pohlman and Gardiner (2000) note that "such decisions are often unilateral, almost always poorly thought through, and in some cases fatal" (p. vi).

The mindset that short-term profitability and shareholder value are the only things that matter in a firm's existence was thoroughly debunked by James Collins and Jerry Porras in a best-selling 1994 book, Built to Last, in which the authors noted that visionary and highly-successful companies like Disney and Wal-Mart are not dominated by the profit motive, even though they are highly successful financially.

Contrary to business school doctrine, "maximizing shareholder wealth" or "profit maximization" has not been the dominant driving force or primary objective through the history of the visionary companies. Visionary companies pursue a cluster of objectives, of which making money is only one—and not necessarily the primary one. Yes, they seek profits, but they're equally guided by a core ideology—core values and purpose beyond just making money. Yet, paradoxically, the visionary companies make more money than more purely profit-driven comparison companies [companies compared by the authors to visionary companies] (Collins & Porras, 1994, p. 8).

Value Driven Management (Pohlman, 1997; Pohlman & Gardiner, 2000) is a comprehensive and integrative philosophy of management that argues that the success of visionary companies is no accident, because these firms are value driven: they consistently and faithfully take multiple values and value drivers into account when they make decisions, set strategy, develop new products, and evaluate changing events and technology. Pohlman and Gardiner (2000) argue that:

…again and again…organizations that balance value drivers in a complex juggling act when they make decisions—and that consistently use these value drivers in their information processing—will out perform firms that do not. Performance, however, is not just short-term profitability; although we freely acknowledge that in market-based economies, firms must be profitable over time or they will fail. The matter of how firms make money is important, naturally…(p. vii).

Value Driven Management argues strongly that there is more to life than just making money, but it does not discount in any way the power and importance of the profit motive in free-market economies.

Value Driven Management

Value Driven Management, as it has been developed by Pohlman and his colleagues in the Wayne Huizenga Graduate School of Business and Entrepreneurship at Nova Southeastern University, is an evolutionary outgrowth of market-based management (Gable & Ellig, 1993) as it has been developed and practiced at Koch Industries in Wichita, Kansas. Value Driven Management is an integrative and comprehensive managerial philosophy that is designed to compliment, and not compete with, other management practices such as reengineering, process improvement, or total quality management.

In his first iteration of Value Driven Management, Pohlman (1997) noted that:

The basic purpose of Value Driven Management is quite simple: when considering making a decision or taking actions, employees must consider the impact these proposed actions or decisions will have on the value of the organization over time. This can only be done by considering sets of values held by relevant constituents of the organization. These include the world culture that is developing, national culture and subcultures; organizational culture; the values of employees; suppliers; customers; competitors; and third parties such as unions and regulators; and last but certainly not least, owners. Organizations must create an environment that embraces this philosophy to be successful over the long term (p. 3).

In the context of Value Driven Management, maximizing value over time is not limited to simply increasing shareholder value, although any realistic analyst or observer must recognize that the profitability of the enterprise is an important concern. The demise of many of the so-called dot.com or internet-based businesses in the first year of the new millennium—about 130 online firms died in the year 2000--is a good example of this. After highly-publicized start-ups, with large amounts of cash available to them thanks to venture-capital support and hugely successful initial public offerings of stock (IPOs), these firms burned their way through large piles of cash with no prospect of turning their financial fortunes around, and withered and died when the e-commerce speculative boom faded. In the long run, businesses must find a way to be profitable, and increase their entire stream of values, including productivity and profitability, human assets and intellectual capital, sustainability and competitive position, good will value, organizational flexibility and resilience.

The phenomenon of internet commerce has also taught us, however, that businesses are not worthless until they become profitable. Value Driven Management posits time as a critical variable in organizational decision making, and emphasizes the role of long-term strategies for creating value in organizational growth; new generation of managers—the CEOs of sometimes money-losing Internet firms like Jeff Bezos of Amazon.com, Tim Koogle of Yahoo, and Steven Case of America Online—is doing just that in preparing their businesses for the future. James Cramer (1999), writing in Time magazine, notes that this new breed of executives is "…managing for a world that doesn't even exist and may not for years, a world of thousands of intertwined communities in constant contact over the internet" (Cramer, 1999, p. 101). Cramer notes that Amazon.com reached a high of nearly $29 billion in market capitalization because it seems likely to become the online department store of the future, even though it has yet to earn a nickel. Despite the fact that is has burned over $5 billion in cash since it went public in 1996, the analysts continue to be optimistic about its long-term survival because the strategies Bezos has put it place seem likely to turn it around by the year 2002.

Market-Based Management

Charles Koch, chairman and CEO of Koch Industries, has an enviable reputation as an enlightened, proactive and visionary executive, even though his company—which is the second largest privately-held firm in the country, behind Cargill—is sometimes referred to as the biggest company you have never heard of. The Wichita-based petroleum, agricultural, chemical and financial services company now has annual revenues in the neighborhood of $38 billion, and currently employs some 15,000 men and women. Since 1967, when Koch took over the company from his father, Koch Industries has grown more than a hundred-fold, and has become a model of efficiency, social responsibility, and productivity.

During a five-year stint as a senior executive at Koch, the second author became familiar with, and helped develop, the concept of market-based management (Gable and Ellig, 1993). Market-based management, as it has evolved at Koch and other firms, is a philosophy of management that recognizes the reality that anticipating, discovering, and communicating customer desires to everyone in the firm will add to the value of the organization over time. In a globalized business world that is increasingly customer driven, this may not sound like a revolutionary philosophy, and Charles Koch would be the first to agree that it is not. He believes, however, that the consistent and long-term use of the philosophy "…helps us avoid the ‘false start' and ‘flavor of the month' problems that have plagued so many other companies and management approaches" (Gable & Ellig, 1993, p. 3).

Market-based management, which has been elaborated by the present authors in their development of the principles of Value Driven Management, is of course rooted in the dynamics of market economies and free enterprise. It is a historical fact, and a current reality, that the most successful societies in the world are free societies with market economies; almost always accompanied by democratic governmental structures, and fair and effective legal systems. Centrally-planned economies have gone under, one by one, because central planners simply cannot know what is best for everyone, nor anticipate and satisfy customer desires, even though it is their conceit that they can (Peters, 1996). Centrally-planned economies have again and again created uniform and grinding poverty, and have produced consumer and voter revolt against authoritarian governmental structures and command economic systems.

Market-based management is no quick fix, or flavor of the month—and neither is Value Driven Management—although as Americans we are intensely attracted to quick fixes, instant solutions, and magic bullets (Gardiner, 2001). Market-based management recognizes that firms must cope with the ever-accelerating pace of change produced by the technological and entrepreneurial revolution sweeping the globe, and to cope effectively they must get rid of bureaucratic barriers within the firm, empower employee decision making at every level in the organization, make financial information available to everyone in the firm (Case, 1995), and encourage entrepreneurship and risk-taking by all the organization's employees. Perhaps the least well known of Deming's 14 principles of total quality management (Deming, 1986) is that fear must be driven out of the workplace if the highest levels of productivity and quality are to be achieved, and Koch has found a way of doing precisely this: Employees work in an atmosphere where they are free from fear, and treated with respect.

Market-based management and Value Driven Management are both rooted in a personal psychology of self-respect, respect for others, and in a willingness to accept responsibility for all one's actions and decisions, including mistakes that result from a willingness to take risks (Branden, 1996; Ferrell & Gardiner, 1991). These values are clearly expressed in Koch's mission statement and its philosophy of doing business (Pohlman & Gardiner, 2000).

The Assumptions of Value Driven Management

Value Driven Management rests on a series of 11 sound (the authors believe) managerial and philosophical assumptions:

Assumption I: Value creation is good. When profits are made legally and ethically, and other components of value—such as employment opportunities for men and women—are created in the same way, the results are positive for both individuals and society.

Assumption II: What is valued drives action. Values do not exist in some Platonic sphere: in the real world, they drive action. Economist Steven Landsburg (1993) sums it up succintly: "Most economics can be summarized in four words: people respond to incentives. The rest is commentary" (p. 3).

Assumption III: The creation of knowledge and its appropriate use leads to value creation. One of the imperatives of the global economy is that both individuals and the organizations they belong to must be lifelong learners if they are to remain competitive. Organizations must abandon authoritarian, fear-based managerial practices—or what Rensis Likert called "System 1" management—and practice participative management that empowers all the members of the organization—or what Likert called "System 4" management (Likert, 1961, 1967). Likert's research demonstrates that more participative firms consistently outperform less participative ones, especially when time is factored in as a variable: authoritarian organizations may do well in the short run, but in the long run they usually run into trouble.

Assumption IV: Value is subjective. Some of the most important decisions that are made in our lifetimes, such as those made by adult learners returning to school, are inherently subjective; but they are nonetheless valid and lead to the maximization of value in an individual's life. In a society that loves numbers, we sometimes overlook or discount the fact that many of the most important and personal and organizational decisions simply cannot be quantified.

Assumption V: There are value adders and destroyers. Employees are a major source of value creation when they are happy and productive, and when their values are in sync with high-performance values in the organization (Preziosi, 1997). They can also be a major source of value destruction when they are unhappy and out of sync with their organizations. Highly successful organizations like Koch Industries and Southwest Airlines have invested a great deal of time and money in developing methods of identifying potential employees' values during the screening process, to ensure a high degree of value congruence.

Companies can destroy value when a problem or crisis arises if they refuse to take responsibility for actual or potential product problems. The recent Ford/Firestone debacle illustrates this point clearly. In the New York Times article "A Blame Game Hurts Both Ford and Firestone" Jeffrey L. Seglin notes that neither firm has been willing to accept responsibility for tire blowouts and vehicle rollovers involving Ford Explorers. Each has instead blamed the other for safety problems with its products. Wrote Seglin:

But when each company vigorously fixes blame on the other, and when each cites a higher ground, it becomes nearly impossible to decide whose claims to give more credence. Even in appearing to take some responsibility, each player casts more doubt on the other than it does on itself.…When responsibility for a problem is not shared by companies, trust is lost not only between them, but also with their customers. After all, why should customers trust the statements of either company on safety issues when each has made it abundantly clear that it cannot even trust the other (Seglin, 2001, p. 5).

Assumption VI: Markets provide vital information. Market economies automatically and effortlessly provide billions of items of information every day through the interaction of supply and demand, but command economies allocate resources irrationally because they do not have or cannot use this information. Adam Smith, was quite right when he remarked some 200 years ago that there is an "invisible hand" present in market economies that automatically guides their operation, including the setting of prices and the allocation of resources (Smith, 1862).

Assumption VII: Opportunity costs affect value. When we pursue one opportunity, we usually must forsake others. If we choose opportunities intelligently, we take advantage of the principle of comparative advantage. It would not be wise, for example, to have the world's finest brain surgeon—who is also the finest cleaner of brain-surgery operating rooms—to do both jobs: surgery, and clean-up. A no brainer, you say. Have the surgeon do surgery, and hire someone to clean up the operating room, and value will be maximized.

Assumption VIII: Order is spontaneous. Perhaps the most profound insight of the late Nobel laureate in economics, Friedrich von Hayek, is that market economies spontaneously bring order to economic expansion and development, even when such expansion is superficially chaotic (Peters, 1996). Centrally-planned economies, on the other hand, have repeatedly failed because of the failure of planners to anticipate or control economic change. A clear implication of the Hayekian concept of spontaneous order for corporate managers and strategists is that strategic plans must not be set in concrete, but must be kept nimble and flexible if they are to be successful (Mintzberg, 1996).

Assumption IX: Values can compete or be complementary. Personal and organizational values are sometimes congruent, and sometimes in conflict with each other. Often it is economic values—such as the need to have an adequate income—that conflict with other important values, but such clashes do not necessarily have to result in "win-lose" choices within the organization (Friedman, Christensen & DeGroot, 1999).

Assumption X: Any action may have unintended consequences. Our long American love affair with new technology, for instance, often blinds us to the fact that it sometimes has "revenge effects." Superhard football helmets, for example, designed to enhance the wearer's protection have inadvertently resulted in serious injuries to other players (Tenner, 1996).

Asumption XI: All personnel are employees. Everyone working for an organization, from the CEO to the night watchperson, is literally an employee. This is not to imply that every person in the same organization has the same decision rights, but it is to suggest that each and and every employee has responsibility for seeking out opportunities where he or she can create the greatest value for the organization.

While each of the 11 assumptions has "stand alone" value, they also overlap and are intertwined, and suggest best management practices that will facilitate and nurture the implementation and development of Value Driven Management in organizations.

The Creation and Destruction of Value Over Time

In any given organizational decision-making situation, it is sometimes difficult to sort out which value drivers are more or less important, but sound and farsighted decisions almost always involve a careful and complex process of weighing and balancing value drivers. Johnson & Johnson's handling of the Extra-Strength Tylenol poisoning scandal of the 1980s involved exactly such a process, and resulted in decisions that turned a potential disaster into value creation for the company. Exxon's decision-making process during the Exxon Valdez oil spill in 1989, on the other hand, turned a very real disaster into an organizational nightmare, because important value drivers were discounted or ignored by the company.

In most organizational decisions, value drivers are normally interwoven and interrelated, but in some cases one or two value drivers stand out, and have a disproportionate impact on the situation. Case examples are an effective way of illustrating this point.

Value driver 1: External cultural values. Exxon's management of a major oil spill that has become famous is almost equally famous for its insensitivity to how the American nation would react to the magnitude of the damage caused by the spill. The company not only spent roughly $2.5 billion to clean up the mess it had made, but it also took a drubbing at the hands of an Alaska jury which in 1995 awarded plaintiffs $5 billion in punitive damages. The company's arrogance, according to the plaintiffs' attorney, Brian O'Neill, was a major factor in the jury's large judgment (Schachner, 1995).

Denny's restaurant chain has demonstrated similar insensitivity to the values of cultures external to the firm. For years its African American customers had complained about denials of service at various Denny's restaurants, and in 1994 the company spent $46 million to settle a discrimination suit filed by six black Secret Service agents who alleged that they had been denied service at a Denny's in Maryland. Regrettably, the firm seemed to learn little from this experience, since in 1998 it was forced to apologize to 40 black sixth-grade students who were denied service in a Florida restaurant.

Value driver 2: Organizational cultural values. The immensely successful low-fare airline company, Southwest Airlines, has developed a dynamic internal culture that emphasizes productivity, flexibility, and hard work. Perhaps the best example of its cultural values is that employees take great pride in being able to get a plane ready to go in only 20 minutes, half the industry average. The company has had only one CEO in its 30-year history: the irrepressible Herb Kelleher.

Value driver 3: Individual employee values. Research by Robert Preziosi (2001), Professor of Management in the Wayne Huizenga Graduate School of Business and Entrepreneurship at Nova Southeastern University and Doreen Gooden has demonstrated that when there is a high degree of congruence between individual employee values and high-performance organizational values, the organization works better in teams. Companies like Koch Industries, Nordstrom department stores, and Southwest Airlines recognize this fact by investing time, money, and energy in selecting employees whose values will be congruent with the organizational values of these successful firms.

Value driver 4: Customer values. In their book on delivering superior customer value, Huizenga School Professors of Marketing Art Weinstein and Bill Johnson (1999) emphasize strongly that companies like Dell Computer, Lexus, Motorola, Rubbermaid, and Wal-Mart—to name just five examples—truly know how to maximize value for their customers. These are companies that do not just pay lip service to the importance of customers and their values, but their entire organizations are designed to emphasize and deliver such value.

Value driver 5: Supplier values. The rise of the global economy has led to the development of dynamic new relationships between suppliers and manufacturers, including the development of alliances between companies and external partners. Cospecialization is one such form of partnership, where "preferred suppliers" make contributions to the design and engineering of components for a manufacturer. This arrangement has reached its zenith in the auto industry where such manufacturers as Volkswagen and Ford have suppliers develop an entire chunk of a car—called a module—and have the supplier locate close to or even in the plant, as is the case with Volkswagen's new plant in Brazil.

Value driver 6: Third-party values. In 1994, a long-simmering labor dispute in major league baseball led to a disastrous player strike, culminating in the cancellation of the World Series. "The result of this classic clash of value drivers—a third party in the form of the militant players' union, the owners eager to win and unwilling to significantly share revenues, and loyal fans who now had many other choices of sports to watch—resulted in the destruction of value for the entire industry for years to come (Pohlman & Gardiner, 2000, p.147)." Richard J. Mahoney, the former CEO of Monsanto Company, argues eloquently that enlightened businesses must be proactive in the area of third-party values, both anticipating and voluntarily complying with changes in government regulations and corporate governance. Alas, major league baseball was almost totally reactive in this area. Pohlman and Gardiner (2000) note that third-party values often create great conflict in business decision making because they so often clash with economic interests, ownership values, and other value drivers.

Value driver 7: Owner values. The late Roberto C. Goizueta, former Chairman and CEO of the Coca-Cola Company, understood clearly that if a company is to create value in the long run it must make itself valuable to consumers, customers, partners and employees; and not just to its owners. Addiction to short-term profitability, he argued, is not a wise way to run a corporation in the long run.

Think about it. If a company wanted merely to create shareowner value right now, its leaders could suddenly make hundreds of decisions that would deliver a staggering short-term windfall. They could gouge their customers and suppliers. They could stop investing in their brands or stop behaving like good corporate citizens. They could slash salaries and benefits. They could put their business up for auction to the highest bidder. But that type of behavior has nothing to do with sustaining value creation over time (Goizueta, 1997, pp. 4-5).

Goizueta practiced what he preached. In a 16-year period as Coca-Cola's CEO he engineered an unprecedented period of profitability that increased the company's value nearly fortyfold.

As the authors have already noted in the introduction to this article, the CEOs of our publicly-traded companies are under tremendous pressure from owners and investors to meet their earnings goals each and every quarter, and these executive officers recognize the simple reality that if they fail to do so, their period of employment will be short indeed. Fortunately for the CEOs of privately held firms, they are not subject to the same short-term financial pressures that the CEOs of public firms endure, but they still must run their businesses strategically and soundly. "Levi Strauss discovered this fact, and painfully, in the late 1990s as it lost market share to other apparel manufacturers who seemed more in touch with the sometimes fickle market for blue jeans and other lines of casual clothing… (Pohlman & Gardiner, 2000, p. 153)."

Broadening the ownership base of a company is often an important contributing factor to increasing its ability to maintain a more strategic, long-term, and proactive orientation. This is the thesis of the 1998 book, The Ownership Solution, by lawyer, banker, and management consultant Jeff Gates, who argues convincingly that extensive institutional ownership of major companies is turning them into nothing more than financial vehicles for passive investors, which has led to a serious decline in corporate stewardship and social responsibility. One of Gates' principal recommendations for broadening ownership is expanding the reach of employee ownership through ESOPs, or employee stock ownership plans. ESOPs grew steadily in popularity throughout the 1990s, and Gates notes that about a dozen publicly traded companies now have majority employee ownership, including United Airlines and Amsted Industries. While Gates cautions readers that employee ownership is no magic bullet for a company's problems, a recent study by Hewitt Associates shows that companies with ESOPs handily outperform companies without, using total return to shareholders as a measure of performance (Eisenberg, 1999).

Value driver 8: Competitor values. In a 1992 interview in Time magazine, Robert Crandall, Chairman and CEO of American Airlines complained that "This industry is always in the grip of its dumbest competitors (Castro, 1992, p. 52)." What Crandall was referring to was the series of fare wars that had plagued the airline industry. The underlying cause of these wars was apparently downturns in revenue such as occurred after the 1991 Persian Gulf War that left the major carriers cash strapped, and struggling to make payments on the new aircraft that airline executives love to buy. The first carrier to reduce fares hopes to skim the market to build cash reserves, but in the long run they inevitably all lose money. In recent years, a full-fledged fare war has not broken out, perhaps because the airline companies have learned something from the behaviors and values of their competitors.

The Balancing Act: Implementing Value Driven Management in an Organization

Based on years of executive and consulting experience, the authors believe that integrating Value Driven Management into an organization's culture requires a minimum time frame of three years, and in some settings and industries may require more. Implementing Value Driven Management does not involve the use of smoke and mirrors, nor sleight of hand, but it does require a degree of commitment and effort that some organizations may find daunting.

Successfully implementing Value Driven Management into an organization and its culture requires the following steps:

Step 1: Management commitment. Probably the most critical single step in developing a Value Driven Culture is long-term commitment from top management to its implementation throughout the organization, accompanied by a commitment to communicate its importance to the organization and all its constituents. The authors have developed an acronym to describe this process of commitment and communication: VMPP. A shared Vision, Mission, organizational Philosophy, and set of business Principles must be created that will support the development of a Value Driven Culture.

The commitment process must begin at the top, but it must not end there. If Value Driven Management is perceived as just another management fad brought home from a seminar by the firm's latest CEO, it will surely enjoy no better a fate than the fads that have preceded it and failed.

Step 2: Employee empowerment. Every employee must not only be an employee, but an empowered employee. Decision-making rights, including the right to take sensible risks, must be spread to every person in the organization and must saturate the firm. In the high-tech global economy, firms that are run from the top down—and that are also authoritarian and abusive—will simply not survive in the long run.

Step 3: Compensation. The necessity to tie compensation to value-creating behavior throughout the organization may be every bit as critical to the implementation of Value Driven Management as step 1. Compensation is still a powerful incentive for most employees in most organizations, and its intelligent use can be a powerful source of value creation for an organization, while its ineffective use can impede the creation of value. In general, effective management of compensation requires that the firm modify or abandon the one-man/one-boss model that was typical of the traditional tall and hierarchical organization. In such a model, compensation was typically handled from the top down, with little or no input from lower-level management or employees, and the process was frequently very political.

In the new millennium, new compensation schemes are emerging—or being increasingly used—that are truly reflective of value creation. Profit-sharing plans have been widely used in American industry, but must be tied to organizational performance to be effective; ESOPs have steadily grown in importance—as has been noted—and are surely here to stay; gainsharing plans are like profit sharing, but are usually based on group or plant performance; and group incentives and team awards are also growing in importance as a growing percentage of the workforce is now team or group-based.

Step 4: Restructuring. The traditional hierarchical, vertical, and functional approach to organizing a business and its operations made sense in an earlier era, when work processes were fairly simple, most workers were uneducated, and life was static and stable. In the new millennium, such rigid structures have become dysfunctional and new organizational models are emerging all over the world that depart from the familiar boxes and lines of organization charts.

These new models take many forms, but Gardiner (1996) has reviewed some of the features they have in common: 1. there are fewer layers of authority or command, and less bureaucracy in the organization; 2. the firm is organized around work processes, and much of the work is carried out by work teams or project teams; 3. the role of the manager and management becomes more of a coach or facilitator, and less that of a "boss"; and 4. problem-solving and analytic thinking skills are at a premium throughout the organization.

Step 5: Employee selection. Companies like Koch Industries and Southwest Airlines have learned that systematic and organization-wide selection of employees who will create value in the positions they fill is another important ingredient in the implementation of Value Driven Management. Southwest Airlines routinely receives over 125,000 applications per year, and its People Department interviews about 35,000 of the applicants each year to fill about 4,500 positions. The individuals chosen are typically those who can use their own judgment and go beyond the job description (Noe, Hollenbeck, Gerhart & Wright, 1997). This emphasis on attitude and personality, as opposed to just technical qualifications, is a conscious attempt to choose persons whose values are congruent with those of the organization.

Step 6: Emphasis on value creation. Value Driven Management, rather like a religious revival, requires periodic rites of renewal. Organizational culture is not static, but is rather a living, breathing entity that exists in the hearts and minds of the organization's members, and so it must be supported and reinforced at times by rituals like the stories employees at American Express and Nordstrom tell about the heroic services they have performed on behalf of their customers. Whatever the form of celebration, a sensible rule is to make it as spontaneous as possible and tie it to genuine achievement, and not just profitability.

Step 7: Lifelong education. Lifelong education is the ongoing and comprehensive education of all of the employees of the organization in the balancing act: How to use Value Driven Management in the organizational decision-making process. The goal of such training is to move all of the members of the organization from a state of (1) unconscious incompetence, through (2) conscious incompetence and (3) conscious competence, until they reach (4) unconscious competence in terms of their ability to process information, think analytically, and make intelligent decisions (Bruner, 1973).

Such a comprehensive training program involves several steps: identifying key organizational issues; determining the most important and relevant value drivers in the decisional process; evaluating the role of each value driver; considering unintended consequences that might result from a decision; and carrying out a mental balancing act in which several questions are asked. For example, have you overlooked anything? Have you considered all value drivers that might be important in the decision? Have you taken time to mull the decision over until it feels intuitively right? Asking such questions in a careful and analytic way will regularly result in a superior and value-driven decision-making process for any organization that takes the time to develop and refine such a process.

Value Driven Management and Personal Happiness

Since work is one of the most important emotional, psychological, mental and physical themes in all of our lives, and a major source of happiness—and sometimes unhappiness—anything we can do to make work a more positive and value-creating process in our lives is well worth exploring. Major changes have taken place in the global workplace, and workforce, in recent years, including the virtual death of lifetime employment with a single organization, and the emergence of contractual relationships between employers and consenting adult employees. The unquestioning loyalty that was traditionally given to the organization by grateful employees has been a victim of such changes, including a wave of downsizings that have cost millions of employees their jobs all over the world.

In this brave new world, job satisfaction and personal happiness are completely the responsibility of the individual, and each person has a choice with regard to how he or she will maximize personal value over time. The psychological underpinning of personal maximization of value is taking responsibility for the identification of one's personal values, in keeping with Nathaniel Branden's (1996) belief that taking responsibility for our lives is the very cornerstone of self-esteem and personal growth. Among other things, this requires that we determine for ourselves how congruent our personal values are with those of the organization for which we work. To determine the degree of personal satisfaction that we are experiencing at work, the authors have developed the Organizational Value Congruency and Satisfaction Scale, or OVCSS, which lists 18 value dimensions and asks respondents to rate their importance to the individual and how congruent the organization's values are on each dimension (Pohlman & Gardiner, 2000, pp. 214-216). After multiplying the importance of each value dimension by the organizational congruency score, a person can calculate a satisfaction score for his or her job. The higher an individual's OVCSS score, the greater the chance that he or she is maximizing personal value in the work environment.

Value Driven Management argues precisely that those individuals and organizations who are wise enough to continue to grow, to expand their competencies in coping with change and making decisions, and who are willing to work hard to do so will maximize value for their organizations and in their personal lives.

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About the Authors

Gareth S. Gardiner received his Ph.D. in Psychology from Princeton University. He is currently Associate Professor of Management in the Wayne Huizenga Graduate School of Business and Entrepreneurship at Nova Southeastern University. He is widely published in the management field, and also has extensive experience as a management consultant.

Randolph A. Pohlman received his Ph.D. in Finance from Oklahoma State University. He is currently Professor of Finance and Dean of the Wayne Huizenga Graduate School of Business and Entrepreneurship at Nova Southeastern University. His previous positions include Dean of the College of Business Administration at Kansas State University, and Senior Executive at Koch Industries.

The authors wish to thank Ms. Rimal Slaoui of Nova Southeastern University for her able assistance in the preparation of the manuscript.