Methods and concepts for Value Based Management (VBM)
Value Based Management
Definition 1: Value Based Management is the management approach that ensures corporations are run consistently on value (normally: maximizing shareholder value).
It is useful to understand that Value Based Management includes all three of the following:
- Creating Value (ways to actually increase or generate maximum future value $ strategy).
- Managing for Value (governance, change management, organizational culture, communication, leadership), and
- Measuring Value (valuation).
Definition 2: Value Based Management aims to provide consistency of:
- the corporate mission (business philosophy),
- the corporate strategy (courses of action to achieve corporate mission and purpose),
- corporate governance (who determines the corporate mission and regulates the activities of the corporation),
- the corporate culture,
- corporate communication,
- organization of the corporation,
- decision processes and systems,
- performance management processes and systems, and
- reward processes and systems,
with the corporate purpose and values a corporation wants to achieve (normally: maximizing shareholder value).
- Value Based Management is dependent on the corporate purpose and the corporate values.
- The corporate purpose can either be economic (Shareholder Value) or can also aim at other constituents directly (Stakeholder Value).