Communication and Value-Based Management

Internal communication of value-based management must be based on appreciation, says Professor Patrick Peters. He recommends a two-tier communication system.

The importance of material goods in the economic system of the 21st century is increasingly declining. Therefore, the focus is shifting to value-based management that addresses the actual individual needs of employees.

Numerous factors show us that the economy is undergoing fundamental change. The most obvious manifestation of the major paradigm shift is the transformation from traditional shareholder value-based corporate governance to the stakeholder economy, i.e. the conflict between a purely profit-oriented management approach that only serves shareholders and a meaningful management approach that takes into account all of a company’s stakeholders.

In this context, the “Purpose Economy” has emerged. This is used to describe the way in which work is changing to reflect employees’ desire to fulfill a higher social purpose in their work. It is an economy in which the value lies in employees and customers finding meaning in meeting needs beyond their own, enabling personal growth and building community. Purpose Economy represents the formulation of a higher purpose beyond numbers and defines a new self-understanding of companies that builds on people’s quest for more meaning in their lives.

Value-based management is based on an extended hierarchy of needs

The principle of value-based management is closely related to this idea. It was developed by management author Richard Barrett, who writes about topics such as leadership, leadership development and values. In his work (2013, all quotes hereafter) “The Values-Driven Organization: Unleashing Human Potential for Performance and Profit”, in the tradition of Abraham Maslow and his well-known hierarchy of needs, he has developed his model of basic needs and growth needs, which he also refers to as deficit needs and insatiable needs.

New human condition is not materially characterized

A basic need according to Barrett is something that people absolutely must get or keep, or want more of, in order to feel safe and happy in their existing material and social environment. Basic needs are self-esteem, relationships and survival, i.e. the existential issues of human life. These needs must be met to prevent problematic living conditions characterized by great material, social or personal hardship. Only then can people turn to their growth needs.

These are “transformation”, “inner cohesion”, “making a difference” and “serving”: the focus here is on achieving an enhanced human condition that is no longer material or shaped by other basic needs. It is about values and qualities such as authenticity, realizing the meaning of existence and living a life with meaning and leaving something behind (see Barrett). In the context of growth needs, money and status symbols play a subordinate role, if any. As soon as the economic basis is secured, people seek to realize themselves and to create a genuine benefit for the general public by means of the four major developmental stages.

Meaningful corporate governance leads to higher performance

According to Barrett, value-based management leads to greater employee engagement in the sense of emotional and intellectual involvement. “Engaged employees devote a high level of discretionary energy to everything they do. They are willing to put in extra effort to get a job done on time when necessary and regularly offer suggestions for improving performance. They want the company to be successful and are proud to have a share in this success.” (Barrett)

These are far-reaching advantages for value-oriented companies, which, thanks to the new strategic approach, can achieve a new level of performance and, if necessary, develop competitive advantages. On the contrary, uncommitted employees are basically not interested in the company and do not do more than is necessary to fulfill their tasks. And if employees have no connection to the company at all, they could even undermine work results and thus contribute to the company’s poor performance (see Barrett).

Quantity and quality: two-tier communication system conceivable

In a value-based organization, internal communication also changes. It is no longer sufficient for this to be purely results- or efficiency-oriented; rather, it must be based on appreciation, in which respect, empathy and recognition are paramount. It aims to strengthen relationships, reduce conflicts and create a positive atmosphere. Appreciative communication thus contributes to creating a harmonious social environment in which people feel heard and understood.

Value-oriented communication should not be limited to facts and figures, as these are elements of the area of deficiency needs. According to Barrett, communication that only functions at this level focuses on consolidating and developing the material or social status quo. This tends to be a quantifiable factor, while growth needs are qualitative in nature. A sense of inner balance or inner peace, which Barrett sees as an expression of a growth need, cannot be multiplied, but only strengthened qualitatively.

In value-oriented communication, the focus is on active listening and understanding the feelings and needs of the conversation partner, avoiding blame, judgment or condemnation, appreciating the opinions, ideas and contributions of others, and constructively working towards solutions in order to meet the needs of all parties involved.

Thus, a two-tier communication system would be conceivable. The first tier is performance and financial communication. This ensures the basic organizational flow of information so that misunderstandings and communication asymmetries do not arise. In the second tier, value-oriented communication is important, in which intangible, qualitative factors play a much greater role, precisely so that people feel heard and understood.

Please also read the following posts:

• Restructuring Without Change Management? Think Again.
• Unleash Potential: Three High-Impact Levers for a Thriving Learning Culture

Patrick Peters

Dr. Patrick Peters, MBA, is a professor of PR, communication and digital media at the Allensbach University in Constance, where he also teaches business ethics and diversity management. He also works as a freelance publicist and consultant, focusing on ethics and communication.

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