Value Based Management
Corporate culture in an organization plays a crucial role in evaluating the organization performance. Value based management is a strategy that is used to achieve corporate culture. The organization welfare requires an elaborate system that defines the strategic activities within the organization. The value based management involves incorporating organization routine procedures to achieve the set objectives. Value based management entails the introduction of organizational culture that is aimed at improving the value of the entity. The process involves investments of efforts, capital and time to achieve its success. According to Haspeslagh, the value based management mainly entails the change of culture but not the financial operation of an organization.
In many organizations, the most predominant factor that contributes to the failure of value based management is basically the resistance within the organization culture. More specifically, the organization adoption of information plays a crucial role in influencing the organization's success. An organization such as Lloyds, Dow, and Cadbury achieved the success of improving the shareholder value by incorporating the attributes of value based management. The theory stipulates that the organization has to adopt the following procedures to achieve its success. The steps involve entails; first, the organization has to focus on an objective of improving the shareholder wealth. This creates rigidity in its operation of its activities, thus hindering any diversion. Secondly, through training, a conducive environment to accept the change is adopted. This provides a smooth process of achieving the proposed changes. Thirdly, through incentives, the employee performance, based on the proposed value is achieved. The incentive process entails increasing the workers' morale and incorporating the importance of value change in their daily activities. Fourth, the changes that lead to incorporation of value among workers should be embraced. Lastly, the changes should be inclusive and broad not narrowly covering the financial concepts only.
Post acquisition process entails the incorporation of organizational culture that was not within the organization. The new processes acquired in the post acquisition process embraces the value that is required within the newly formed entity. Value based management serves as a tool to incorporate these required elements. Based on the above mentioned attributes, the organization is able to gain value by adopting new culture. This mainly entails the process of incorporating the workers objectives towards the organizational goals. The procedure entails the use of management effort in their routine activities of corporate governance to improve the value within the organization. Explicit embracing of value based management has led to many organizations achieving the shareholder value improvement, for instance, the value of Cadbury organization is contributed by the explicit adoption of value based management. The structure of an organization which results from the post acquisition together with conduct within the entity resulting from adoption of value based management leads to the achievement of organizational value which leads to improvement of shareholder’s objectives. The model can be described as follows;
VBM
Post-Acquisition
There is a link that exists between the value based management and post acquisition process. The conduct and structure formed by the newly formed organization determines the success of the new entity basically when value based management attributes are adopted. The attributes that the workers will embrace will influence the success of the strategies of value based management. However, as revealed by the various research conducted, the success expected to be achieved from the adoption of value based management is not fully attained. The theory mainly assumes that the organization environment is static and is not subject to any changes. The assumptions made by the theory may have contributed to this limitation. This creates a gap that researchers need to conduct a study to reveal the measures that should be adopted to achieve fully the organization value goals.
Works Cited
Haspeslagh, Philippe, Tomo Noda and Fares Boulos. "MANAGING FOR VALUE." (2001): 64-74.
