Value-Based Management - Explained
What is Value-Based Management?
Written by J. Mance Gordon
Updated at April 22nd, 2024
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What is Value-Based Management?
Value Based Management (VBM) is the management philosophy whereby managers focus on the creation, management, and measurement of corporate value.
What is Value in a Business Organization?
Value in a corporation has traditionally meant maximizing shareholder value. This is consistent with the agency theory of corporate governance.
A broader concept of value creation includes generating value for all stakeholders of organization. This is consistent with the stakeholder approach to corporate governance.
What are the Elements of Value-Based Management?
Value-based management includes planning and execution that aligns the following:
- Vision and Mission
- Company-Level and Competitive Strategy
- Governance
- Culture
- Organization and Structure
- Communication
- Decision-making procedures and systems
- Performance Management Processes and systems
- Reward and Incentive Systems