Concept Details
Value Management Deficiency Syndrome- A Curse to Global Economy
If we look back at the genesis of global financial meltdown, and the fiasco of Lehman Brothers, AIG, Madoff and Satyam Computers of India there are lots of things in common. The best business practices were established over the years, followed and propagated globally through different channels such as ISO Certifications/ TQM/ Business Re-Engineering / Rating companies and what have you. The best of the global companies managed by best of MBAs and the best brains of “Mecca of Management” telling the world about “What they don’t teach you at…” They were giving best of quarterly results, years after years with best of the numbers in the game. And yet “all the king’s men” could not stop the melt down. What went wrong? Much has been written in last few months about the greed which was in overdrive mode in the global corporate world everywhere. Billons of dollars were waiting to be distributed after four quarters of so called performance. It was always a tight ropewalk to balance the results with best business practices. Gradually the latter had to be sacrificed to grab the limelight of the moment and credit in the personal bank account. The sure shot recipe to global meltdown. So where do we go from here?
The crux of the global melt down is beyond the numbers and the rules. The solution also has to be beyond them. The value system or the lack of it in the global financial world has been exposed by the meltdown all over the world. The companies at the receiving end of bailout packages have been classic examples of the malaise I call “Value Management Deficiency (VMD) Syndrome”.
There was a big chasm between value system of the stakeholders and the promoter-manager. Over the last decade the value system of the promoters underwent gradual but definite change reflected by post fiasco revelations. On the other hand the value system of the stakeholders fortified with higher expectations in the growing business sphere. While the promoter failed to take stakeholders into confidence at every stage (by design) and took them for granted, the stakeholders miserably failed to even hazard a guess what was behind the façade. By the time the stakeholders realized the divergence of the goals and the hidden values nurtured by the promoters it was too late.
Finally it all boils down to the values. The new paradigm of business environment must address to identify, systematize, strengthen and legalize this forgotten core of capital markets and entrepreneurship. The values may seem abstract and utopian in the murky world of business and yet the fact is that the unprecedented global turmoil is due to the “Value Management Deficiency Syndrome” threatening to suck the world into black hole of misery of financial catastrophe, job losses for the millions, may be failed nations and failed leadership. We are staring at the biggest global challenge since WWII. Barack Obama has come to the White House not because of his track record of governance but the value system he projected. We have to see how he translates the espoused values for the benefit of the billions of people around the globe.
Can an entrepreneur jot down his value system and put across to the shareholders plus other stakeholders? The expectations of the stakeholders have to be factored into the business model and strategies have to be evolved to achieve the same within set limits of value system. Value system comprising of both quantitative as well as qualitative parameters which are critical to promoters, shareholders, customers, vendors, financiers, to be delivered in the end, can be integrated into performance review models.
It is said that whatever CEO does becomes the culture of the organization. Value systems are self imposed & nurtured and do not need auditors or regulators. The stakeholders judge organizations by the value system for delivery of performance. Customers, vendors, financiers and employees of an organization would leave when there is a mismatch between their value systems. To me a value system sets boundary limits for different aspects of conduct of business.
Annual or periodic reviews of value system would ensure consistency, compliance and communication down the line about how important the value system is to the stakeholders. Value system would always come under pressure from demands of different stakeholders. That is where the trade off in values (vis-a-vis goal) comes and signals the beginning of the downslide. Some businesses have flourished very fast by manipulations and compromise in values. In last few decades, exceptional growths and superlative performances have been achieved by treading on the thin line between desirable and undesirable values and the Do,s and Do’nts.
We need torch bearers and a movement for restoration of faith & integrity in the complex business environment to uphold the values to fight wide spread & deep rooted fatal virus of “Value Management Deficiency Syndrome”. The annual reports, balance sheets and conduct of an organization must reflect & reaffirm the value system to the stake holders assuring integrity and earning their faith.
Needless to add that the governments, the regulators and law enforcement agencies all need to guard their value systems as they invariably translate into national ethos. What is needed is convergence and management of the core values for growth of society at large.
Millions have lost jobs across the world or are threatened. I am sure they would agree with me that erosion of value systems has been at the root of the collapse of the global economy resulting in job losses the world over. If some of them can take this up and make up the deficit in value management in any organization, it will go a long way to contribute in the reversal of melt down process and bringing VMD Syndrome under control.
Vijay M.Deshpande Corporate Advisor Strategic Management Initiative Pune March 19, 2009
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