Did you ever ponder the value of the company you work for,
the civil service you consult or the association you make donations to?
Not in the financial sense. No. The question is:
Are those organizations valuable for society at large?
And hereby valuable for you? To answer those questions,
the University of St.Gallen developed a unique approach
of Public Value. Its novelty is to embed
management concepts, like Shareholder Value, Customer Value,
Sustainability, Corporate Social Responsibility, Shared Value
and Stakeholder Value within society as a whole.
The concept of Public Value has its foundations
in the idea that we humans are social animals. We are virtually interacting
with each other
all the time: Together, within a group and in large organizations:
Companies, the public service
and unions and associations build the ecosystem
in which we live. That’s why scholarship sees organizations
as “productive social systems ”. However, companies and organizations
aren’t just places where social interaction happens.
They produce goods and services; they create jobs,
pay taxes and social contributions, carry out legally fixed performance mandates
and unions and associations perform important tasks for our civil society.
Thereby, organizations deeply impact our living environments,
push or hold back progress and coin
our attitudes towards society – not least also through advertising.
They constitute – as sociologists like to say –
a reproduction mechanism of society with all its values,
rules and norms. Simply put: Organizations make society
and thus generate Public Value. But,
what exactly is Public Value? Public Value means
value creation towards the common good. That is, the added value and benefit of
an organization for the wellbeing
of each individual and the general public – in other words
the common good. It represents the values and norms, which
shape our way of living together and which everybody benefits from.
Effects that go beyond mere economic transactions
and that affect our living conditions, are understood
as negative or positive externalities by economists.
Accordingly, organizations may destroy or
create common good. This, however, depends on one’s perspective.
That’s why the concept of common good or Public Value
is unique: It is all about looking at organizations
from the point of view of society.
But how can we evaluate an organization
from the standpoint of society?
Psychology comes in handy here. It found four stable, basic human needs that build
the motivational
and emotional backbone for the evaluation of Public Value:
one: Each of us would like to understand the surrounding world
and to have a target-oriented effect on it.
Two: Each of us seeks recognition as a human being.
Three: Each of us strives for sound social relationships.
and four: each of us looks for positive and enjoyable
experiences. These four elements result for
every individual in a distinct pattern of needs,
which organizations touch and influence with their performances
and behaviors. Let’s wrap it up: The concept of Public Value
does not understand the value creation that an organization seeks to generate
as mere material thing, but also as a motivational
and emotional one that is anchored in our awareness.
So, it is all about the images in our minds.
But is this interesting for managers
and politicians? Yes.
Various organizations think about their contribution to the common good
through their core businesses or performance mandate.
Fresenius Medical Care, for example, wanted to know the social appraisal of
of their dialysis clinics.
Swiss insurance company Mobiliar analyzed the potential effects
of a corporate acquisition on their Public Value. The Football club FC Bayern
Munich
examined the challenges of its growth strategy for its Public Value.
And the German Federal Employment Agency – one of Europe’s biggest civil services –
tried to find out which contribution to the common good legitimizes
its reason of being.
Now, how exactly were these organizations able to measure their
contribution to the common good?
The University of St.Gallen developed two methods to analyze Public Value.
Both focus on the four basic human needs.
One: The Public Value Scorecard.
Two: The Public Value Atlas. The Public Value Scorecard
focuses on five questions: one: Is it profitable?
Two: Is it useful? Three: Is it decent?
Four: Is it politically acceptable? And five:
Is it a positive experience? Keeping these five questions in mind when making
management decisions
allows us to think beyond the profitability of the company
and take into account the four basic human needs.
Not everything always fits neatly, however.
A management’s initiative for example, could be profitable
and useful, but at the same time neither decent nor politically
acceptable.
It also may be legal, but not legitimate yet.
The second method is termed the Public Value Atlas.
In this case, the general public is directly asked
what Public Value an organization creates. Similar to customer surveys
it is possible to gather management information at the heartbeat
of society. An organization is able to better understand for what it
is esteemed for and for what it isn’t; if its actions are perceived as
legitimate and if its efforts have a positive impact on the public.
“This is all about advertising and political marketing!”,
you say? At the core of the Public Value
Atlas lays the assumption that sooner or later, empty promises
won’t hold. Public Value is what
the public values. Put simply: Public Value is a matter of
attitude. And the attitude of all of us determines
how valuable the activity of an organization is.
The Public Value approach tells us that an organization always
acts meaningfully, whenever it gets appreciated by the public
and thus whenever it contributes to a functioning society.
It helps to scrutinize management decisions against their compatibility
with the common good. It fosters a new understanding
of value creation that combines hard and soft factors.
and it makes it possible to evaluate the performance
of an organization in a new way. Public Value
matters for all of us: management, society
and you.