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MANAGING VALUE-BASED ORGANIZATION

It’s Not What You Think

Contents

PART I ORGANIZATIONAL HISTORY

1 Organizational evolution

History tends to be thought of in terms of hundreds, if not thousands of years. Depending on the nation, culture, or discipline, written materials that support that history have existed for perhaps 10 000 years. Management literature, however, has been published only in the past 100 years, and the great majority of that in the last 30. Drawing on sources from the social and economic historical record, we have described how the organization and management of work has changed from the pre-Industrial Revolution period in England to the post-Industrial Revolution period in America nearly 400 years. This chapter has provided a foundation for the existing management literature and has given scholars, professional managers, and students, an historical context within which changes in the organization and management of work can be understood.

2 Traditional organizations

The traditional organization embodied all the changes to the agri-economy wrought by the English and American Industrial Revolutions. It reordered the factors in the organization and management of work that had been thrown into chaos, and it established the pattern for the vast majority of organizations in industrialized societies up to the beginning of the 21st century. The design of the traditional organization was predicated on Taylor’s (1919) one best way: an optimal manner in which work should be done, as well as an optimal way to make sure it was done.

3 The horizontal revolution

The horizontal revolution has transformed the way that work is organized and managed. Like all revolutions, this transformation is erratic and chaotic, and the effects of this revolution are spreading unevenly – faster through some industries and even nations than others. Some organizations have recognized the inevitability of this revolution and have actively deserted the traditional organization.

4 The value-based organization

The value-based organization is distinguishable from all other organiza tional forms by its unswerving commitment to deliver value to all of its stakeholders all of the time. The value transposition provides the mechanism through which this value is exchanged as well as the constituent parts. Unlike transactions, the value transposition emphasizes parity of exchange, as well as long-term and ongoing relationships between suppliers and customers.

PART II THE TRADITIONAL HYBRID

5 The myth of rightsizing

In the traditional organization, work was organized by function or product. Among the disadvantages was the fact that each function or product artificially separated one part of the organization from the other to the extent that the one did not know what the other was doing. Traditional hybrids attempted to rectify this by integrating these two forms. In a matrix, one form was superimposed temporarily over the other, creating one organization inside of another

6 The myth of competitive advantage

Strategic management is accepted widely as the means through which competitive advantage can be realized. But, management strategy has its own contradictions. There is no agreement on what it is, who does it, how it is done, or if it makes any difference at all. Most strategies fail because they are not implemented, and most of those that are put into practice are formulated improperly. A root cause for the management failure to create and implement effective strategies is that they are designed to deliver competitive advantage, which itself is undeliver

7 The myth of the balanced scorecard

This chapter examined the mythological link between effective management and excessive measurement. Several popular tools and techniques were discussed. The balanced scorecard was designed to enable an organization to evaluate the degree to which it implemented its own strategies. It attempted to integrate both financial and non-financial measures of organizational performance so that short-term as well as long-term goals were considered

PART III SURVIVING THE UPHEAVAL

8 Implications for organizations

Organizations must take whatever steps are necessary to eliminate activities that are not value-based – by relinquishing those internal controls that inhibit its ability to create and exchange value and through outsourcing and offshoring. Everything in the organization is affected by everything else within it. This means that its policies and procedures, the language it uses, the culture it creates, and the physical environment in which people work, must all support the value-creating and value-exchanging objective.

9 Implications for managers

When organizations dissolved the psychological contract they, in effect, told their staff that employee loyalty was no longer of value to them. This made every worker an independent contractor and changed the role of the manager from a supervisor or facilitator to a value director whose responsibility it now is to insure that both employees and organizations receive the value they expect.

10 Implications for employees

Since the dissolution of the psychological contract, all employees have become independent contractors (ICs) – responsible for obtaining their own work, providing in many cases their own tools and equipment and sometimes their work space, and personally managing their own benefits, as well as their professional development.

11 Implications for human resources managers

Those who work in what has been referred to as human resources have the most challenging job in organizations. The horizontal revolution has relinquished them of their traditional responsibilities. Employees have become independent contractors (ICs), all of whom now bear the responsibility for managing their careers as well as their benefits. Line managers have taken the rest.

Figures and tables

Figure 1.1 Organizational evolution
Figure 3.1 Process flow
Figure 4.1 The value equilibrium
Figure 4.2 TQM vs. VBO
Figure 4.3 The value transposition
Table 5.1 Summary of organization types

Edward Elgar
Cheltenham, UK • Northampton, MA, USA