Do You Create Value?
Need one of those deep, reflective questions to ponder when you take some time off this summer? Try this: do I create and contribute value in my work, or do I consume value?
Not sure what it means? This question is one of those values questions. That is, do I take more from the company or business than I give or develop? Is property in the enterprise mine or everyone’s? Does the company or business owe me more than I owe to it?
Still mystified? A small example: my child needs school supplies. If I am a value creator, I go out and buy them myself. If I am a value consumer, I go to the supply cabinet and help myself to what I need because “they owe it to me.” A large example: the executives at Tyco—or Enron, or so many high-flying companies of the 1990s—who helped themselves to huge bonuses, stock options (which they exercised) and, in Tyco’s case, loans that were forgiven or personal artwork purchased with company assets (and taxes evaded).
Pennies or millions, it all amounts to the same thing—the value belongs to me, and I can do what I want with it. That’s called selfishness. The importance of the enterprise centers on me and what I can get from it. Here’s another example: the employee who develops intellectual property such as software, artwork and design, or a business process on company time and money and then becomes furious upon discovering the property doesn’t belong to them.
Sometimes the compensation question becomes ugly. Should managers and executives be paid vastly more than frontline workers? What is the value they contribute compared to that frontline worker? Is excessive compensation a version of stripping the enterprise of its value? Do they think they deserve it? The same question can be asked of those who feel if they are entitled to the same wages and benefits when times are tough as when times are good. The mentality is “they owe it to me.”
Maybe the burst bubble of the 1990s taught us a lesson. It’s not how much we take from the enterprise that counts or lasts—it’s how much we contribute to lasting value. From an ethical standpoint, our role in the enterprise is not to take as much as we can from it because we somehow deserve it or it’s owed, but because of what we actually create that someone finds worth a price they are willing to pay.
Maybe it’s a radical concept, but the entire and sole purpose of any enterprise is to create value for a customer and for society at large. One company in the greater Peoria area created an employee stock ownership plan. The value of the enterprise is based on the productivity and cost savings realized by every employee. The interesting effect is employees spur one another on to be productive and not to waste, and to keep costs and prices competitive for their customer. Every employee asks: does this create value, or detract from it?
It doesn’t take an ESOP to stress value creation. So much is set by the example of the company leadership and by the shareholders. The company’s leaders tie any compensation to value creation, which is reflected in the productivity and enthusiasm of any employee. Shareholders forego hunger for easy money and invest to provide capital for enterprises to expand and—you guessed it—create more value (and not only for them, but for society at large).
In the end, all enterprises are judged by the value they create for society through products and processes that enhance the quality of life. Maybe the dot.com lesson teaches us the fundamental ethics of value creation never change through history. Maybe the Tycos and Enrons of this world remind us business isn’t about the value we loot from the enterprise, but the value we contribute, that will be the yardstick by which we judge the quality and value of our walk here upon earth. IBI
Not sure what it means? This question is one of those values questions. That is, do I take more from the company or business than I give or develop? Is property in the enterprise mine or everyone’s? Does the company or business owe me more than I owe to it?
Still mystified? A small example: my child needs school supplies. If I am a value creator, I go out and buy them myself. If I am a value consumer, I go to the supply cabinet and help myself to what I need because “they owe it to me.” A large example: the executives at Tyco—or Enron, or so many high-flying companies of the 1990s—who helped themselves to huge bonuses, stock options (which they exercised) and, in Tyco’s case, loans that were forgiven or personal artwork purchased with company assets (and taxes evaded).
Pennies or millions, it all amounts to the same thing—the value belongs to me, and I can do what I want with it. That’s called selfishness. The importance of the enterprise centers on me and what I can get from it. Here’s another example: the employee who develops intellectual property such as software, artwork and design, or a business process on company time and money and then becomes furious upon discovering the property doesn’t belong to them.
Sometimes the compensation question becomes ugly. Should managers and executives be paid vastly more than frontline workers? What is the value they contribute compared to that frontline worker? Is excessive compensation a version of stripping the enterprise of its value? Do they think they deserve it? The same question can be asked of those who feel if they are entitled to the same wages and benefits when times are tough as when times are good. The mentality is “they owe it to me.”
Maybe the burst bubble of the 1990s taught us a lesson. It’s not how much we take from the enterprise that counts or lasts—it’s how much we contribute to lasting value. From an ethical standpoint, our role in the enterprise is not to take as much as we can from it because we somehow deserve it or it’s owed, but because of what we actually create that someone finds worth a price they are willing to pay.
Maybe it’s a radical concept, but the entire and sole purpose of any enterprise is to create value for a customer and for society at large. One company in the greater Peoria area created an employee stock ownership plan. The value of the enterprise is based on the productivity and cost savings realized by every employee. The interesting effect is employees spur one another on to be productive and not to waste, and to keep costs and prices competitive for their customer. Every employee asks: does this create value, or detract from it?
It doesn’t take an ESOP to stress value creation. So much is set by the example of the company leadership and by the shareholders. The company’s leaders tie any compensation to value creation, which is reflected in the productivity and enthusiasm of any employee. Shareholders forego hunger for easy money and invest to provide capital for enterprises to expand and—you guessed it—create more value (and not only for them, but for society at large).
In the end, all enterprises are judged by the value they create for society through products and processes that enhance the quality of life. Maybe the dot.com lesson teaches us the fundamental ethics of value creation never change through history. Maybe the Tycos and Enrons of this world remind us business isn’t about the value we loot from the enterprise, but the value we contribute, that will be the yardstick by which we judge the quality and value of our walk here upon earth. IBI