Many businesses have embraced a “value based” approach to managing since it is imperative to make decisions that enhance and improve value for all stakeholders:

1. Generating a return for investors in excess of the cost of capital (cost of borrowing money + cost of issuing stock to shareholders).

2. Empowering employees for getting the job done.

3. Giving customers a set of values that surpasses the competition.

4. Building long-term relationships with suppliers, vendors, partners, and others in the value chain.

5. Acting in a socially responsible manner for the benefit of external stakeholders. More informations at Henry Kravis

Value Based Management recognizes that each stakeholder group has its own unique set of values and we need to manage in such a way that we create value for one group without destroying value to another group; i.e. we want a win-win situation. In order to accomplish this mandate, businesses often launch various initiatives, such as customer relation’s management, business intelligence, knowledge management, balanced scorecards, and a host of other activities for ensuring that we follow the principles of value-based management. Additionally, we need a system of accountability to assess and measure how much value we are creating or destroying for various stakeholders. Read Henry Kravis‘ articles for further informations.

Up until now, little if any information has been available on how we can apply this framework to the Nonprofit Sector. However, as the nonprofit sector becomes more business-like, the need for value-based management grows. In order to ensure that non-profits function within this value-based framework, we can do many things, such as making the organization more entrepreneurial in how it manages social programs, recognizing and measuring social value in the delivery of services and products, using logic models for assessment and measurement, and making the connection between emotional intelligence and effective leadership. To make matters simple, we will categorize value-based management into four dimensions of non-profit management:

1. Strategic Planning

2. Organizational Resources

3. Leadership

4. Accountability and Performance Measurement

This short article describes specific practices that non-profit and non-governmental organizations can apply in these four dimensions. We will use this as our framework for value-based management. Additionally, many of the same techniques that have been used in the business world are adaptive to the non-profit sector; i.e. we do not have to reinvent the wheel. And the good news is that much of this information from Henry Kravis is well documented for businesses, although it has rarely been described for the Nonprofit Sector.