The science of ‘worth’ – your Theory of Value

Non-profit directors and managers don’t need to be philosophers to consider issues of value in their work, but it may help them to recognise the many different forms of value they have a responsibility to promote and nurture. Every decision and action is, of course, an expression of value. What we consider important, or of worth, is what we pay attention to.

Value philosophy and practice

According to Britannica, axiology (from Greek axios, “worthy”; logos, “science”), also called THEORY OF VALUE, is “the philosophical study of goodness, or value, in the widest sense of these terms. Its significance lies
(1) in the considerable expansion that it has given to the meaning of the term value and
(2) in the unification that it has provided for the study of a variety of questions -economic, moral, aesthetic, and even logical — that had often been considered in relative isolation

My recent posts on integrated (multi-capital) approaches to value, and on measurement and evaluation matters (see links below), have already reflected on some aspects of value. In this post, I canvas a broader (if incomplete) overview of value issues and perspectives likely to be on the agenda for most non-profit and for-purpose organisations. This may not qualify as axiology, but it does offer some degree of synthesis, and therefore unification of perspectives.

Worthy purpose

The prime driver in non-profit and for-purpose organisations is our worthy purpose. This is the central definition of what we value most highly – the importance of serving our cause and its associated stakeholders.

Great care is usually taken to frame a non-profit organisation’s purpose so that it captures the essence of its raison d’etre (reason for being). While such purpose statements are meant to be enduring, circumstances can change so that refinement or revision of the original purpose is warranted. Environmental, market, and legal changes are among the factors that can necessitate revising or reaffirming your purpose.

Multiple meanings

Value is a term with a number of meanings, some of which are further qualified by pairing with other terms e.g. social value, economic value, value creation, value management, value proposition, value erosion, etc. Some of these terms are defined in the chart below.

The two key meanings we attach to the noun ‘value’ in non-profit governance and management relate to

  • the regard that something is held to deserve; the importance, worth, or usefulness of something
  • principles or standards of behaviour; one’s judgment of what is important in life

We also use the verb ‘value’ to mean:

  • estimate the monetary worth of something
  • consider someone or something to be important or beneficial; have a high opinion of …

Don’t judge or discriminate, but …

The entirely worthy injunctions against judging others or discriminating against them could never be read as permission to avoid discernment. Indeed, failure to discern good from bad, legal from illegal, wasteful from efficient, effective from useless, and so on, would constitute either negligence or incompetence on behalf of directors and managers.

Overheads – keeping the lights on

The indirect costs of running non-profit organisations are often treated as low priority areas in preference to big-ticket programs and projects, but undervaluing these areas undermines the capacity of the organisation to deliver all of its goals. A recent Social Ventures Australia article offers very helpful insights into this issue. It is therefore recommended for circulation to your Finance and Risk Committee/s and Board.

Hard and soft value

Historically, emphasis was placed by directors and managers on what could be measured, especially money, and so quantitative measures dominated. These continue to be central to the use of key metrics as we monitor the financial health of our organisations, and consider statistics like membership trends, donations, social media engagement, and other numeric data.

These objective measures are sometimes described as ‘hard’ value metrics, as distinct from ‘soft’ value qualitative data such as opinion surveys, social impact measures, professional development outcomes, and other more subjective measures.

Creating Sustainable Value

The charts below refer to the calibration activity performed by directors and managers as they seek to promote value creation measures whilst reducing exposure to value eroding conditions and circumstances.

More of this and less of that” suggests that the value equation is not black and white. Rather, it is a continuous exercise of supporting and enabling value creation while blocking deleterious actions and conditions.

A Taxonomy of Values and Value

Some confusion inevitably arises when we talk about values and value. As noted above, both refer to matters we consider important or worthy, but they encompass a multitude of quite different concepts and fields.

In addition to the header image above, the two charts below offer partial maps of various kinds of value and values commonly referenced in third and fourth sector governance and management. It may be helpful to include this chart (or your own version of it) in your board induction pack. This could assist new directors in better understanding how your organisation addresses value creation – and promotion of your values.

Value statements, queries, and actions

Non-profit ‘value statements’ often include various of the meanings mentioned above. For example:

  • When we assess the trade-off between benefits, risks, and costs, does this proposal represent a good value proposition?
  • We aim to deliver consistent value for our stakeholders
  • We honour our core values of respect, service, fairness, and excellence
  • We should ensure that our asset register reflects the replacement value of our inventory as well as the current depreciated value
  • We seek to place more value on the quality and effectiveness of our outcomes than the hours we spend at work
    Does the registration fee for this online course reflect fair value for members compared with non-members?

Value is a consideration in every decision your board makes, both in terms of the substance of the matters under consideration and the deliberative processes you use.

See also:

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