Value – What Does It Mean? The Sources and Targets of Value

Moving on from understanding how organisations define TM, the discussion was directed towards the concept of ‘value’. The objective was to explore how organisations think about value (how they define and create it) before relating the concept of value to the discussion of TM and examining how strategic actors think about it in relation to TM. Whilst a discussion of value elicited different perceptions and insights, it was interesting to notice that in these organisations, the language of value was not common, and perhaps not widely used by the strategic actors. I cannot deny that this was no surprise given the lack of consensus around the meaning of ‘value’ (as a subjective concept) in the academic literature, and the findings showed that in practice, too, the concept of ‘value’ is not clearly understood. This perhaps brings to the surface a plurality of perspectives about the targets of value (who value is created for) and the sources of value (who creates value). Despite this plurality of perspectives, however, there was a common and simplistic view across all five organisations that ‘value’ is related to achieving sales targets and generating revenue and profit. So the way in which strategic actors related to the term ‘value’ was maybe immediate and certainly context-driven (as sales organisations, these firms are driven mostly by sales targets and the ability to produce products and services which meet customers’ needs and subsequently generate revenue and profit).

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For example, the Cluster Leader in Organisation Y describes value in relation to sales and achieving targets:

“Value … it’s achieving the targets, yes, we look at the customer satisfaction, but if you look at what the highest focus is, it is sales, how much are we selling, how much are we achieving, how much are we growing. It is numbers; it is a number-driven organisation by default - the whole market, by the way, it is not only us …”

5.3.2.1

Targets of Value

To describe what ‘value’ is, strategic actors also reflected on the targets of value creation. In many parts of the literature, it is emphasised that the targets of value creation are (for example) business owners and shareholders (Porter, 1985, Sirmon et al., 2007), customers (Kang et al., 2007, Priem, 2007), stakeholders (Post et al., 2004) and societies and nations (Porter, 1998, Seung-Hyun et al., 2007). From the findings, I observed that across all five organisations value was perceived to be created for customers and shareholders, and therefore as explained above, was associated with revenue generation and making profit (i.e. achieving sales targets, increasing market share and making money) and delivering on customers’ expectations (i.e. providing services and products which meet customers' needs).

For example, the Director of Marketing in Organisation Z described value in relation to sales and profit, while the Head of Strategic Advice in Organisation V described it in relation to understanding the customer’s needs, as far as possible anticipating these, and being able to develop the products and provide the services required to achieve customer satisfaction:

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“so, our value model is two things, one is to be able to provide a unique service delivery

experience to the customer, and the second value that we bring is hopefully to be able to do it more efficiently and cheaper than our competitors.”

The findings from Organisation X (which are very specific to this organisation) showed that in addition to creating value for customers and shareholders, they were also focused on creating value to the local communities they serve, and for the cities and governments that support their global operations. This is due to the fact that in Organisation X there was observed to be a sense of social responsibility and an intent to make a difference to the lives of the people they touch. This was reflected in their mission statement and engrained in their corporate culture.

For example, the General Manager of Organisation X stated that in his organisation, value is created when they can change and improve the lives of people through technology, so in this particular organisation, the company was committed to making a difference through the technology and products they offer. By default, this brought to the forefront of their agenda the ability to influence people's lives and support the communities they operate in. Therefore, to them, in made sense to relate the term ‘value’ to their ability to add value from that perspective:

“what do we do as a community that we live in; how do we change the lives of people or

how do we improve the lives of the people in this country? How do we help the government

to create new jobs, what’s our plans regarding cybersecurity, for example - all these

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5.3.2.2

Sources of Value

In their attempts to describe value, interviewees also reflected on the sources of value (i.e. value-creating resources), and whilst various perspectives were detected, there seemed to be a common view among all five organisations that talent are a critical source of value creation. In these organisations, people were perceived to contribute to value creation, but not just any type of people – instead, it is people who are identified as valuable to the organisation because the knowledge and expertise they possess gives them the ability to deliver results, resolve complex problems, create and innovate, and thus to create value for the organisation. In organisations where value is created for customers and shareholders, value-creating talent were described in relation to their ability to understand customers’ needs and translate these needs into products and services which contribute to increased sales and result in generating revenue.

For example, the Head of HR, MEA in Organisation Z describes people as the most important asset of the organisation, as does the VP Advice, MEA in Organisation V:

“This sounds so mellow, but I mean people are the most important asset. We can have brilliant products, we can have a brilliant strategy, but if it is not implemented by the right people or produced by the right people, or sold by the right people, or developed by the right people, we are worth nothing. So of course, it should be the core of our business, people are our important asset, it is what it is. because with the right people you can even sell bad products …”

“The people ... and I wouldn’t underestimate the people because I think there are a

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area and they might be slightly stronger in another area, and for us to differentiate again

we must be better at thinking and we must be better at executing.”

The emphasis on people as value-creating resources resembles what has been argued in the RBV literature (Barney, 1991, Barney and Clark, 2007), where resources which are valuable, rare, inimitable and imperfectly substitutable are seen as sources of sustained competitive advantage and value creation. In these organisations, having the right people is critical to business success, but as I explained earlier, the criteria for identifying the ‘right people’ (i.e. valuable talent, high potentials) are not clear-cut, but differ from one organisation to another and even from one strategic actor to another, again drawing attention to the subjectivity surrounding what is meant by concepts such as the 'right people'.

In addition to human capital resources, there are other resources such as physical capital resources and organisational capital resources (Williamson, 1977, Tomer, 1987). For example, in these organisations, it was observed that external partners, technology and R&D facilities, intellectual property, knowledge and expertise which are developed internally, as well as corporate culture and internal structures, were also considered to be value-creating resources.

For example, the Business Intelligence Lead, Israel in Organisation X explained the importance of the ecosystem his organisation had created around itself as an extra resource for creating value through partners. He also mentioned the non-people-based resources his organisation leveraged to create value. This indicated that in these organisations, whilst people are the most valuable resource, there are other resources which they consider critical to the creation of value:

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"So, it is about the ecosystem, so I guess for every dollar that we create directly we want to have like 10 dollars of value that is created indirectly because that is how you create an

ecosystem … so think about the value that we can extract from partners around us in the

ecosystem to create the value and of course, there are non-people resources, for example, servers and infrastructure and so on, that is helping us to deliver that value."

Thus, while people may be recognised as the most critical value-creating resource an organisation might have, this brings to the surface the importance of TM to value creation. This is perhaps better explained by the Business Lead in Organisation X, who suggested that TM is critical to value creation because it is mostly concerned with the management of valuable people:

“so, for me, I mean again the most critical resources that we have is people, and therefore talent management is critical because that is the key resources that we have that creates value for the company, like business value. So, to me, it is a no-brainer, right, why I see

talent management critical for value creation.”

This on its own is a very interesting finding, in which we start to see a shift in strategic actors' mindsets from perceiving TM mainly as just another HR process (as I pointed out earlier in the findings) to an enabler of value creation. In the next section, I elaborate on how the value of TM was perceived by strategic actors, and the impact of the value discussion on their thinking and perspectives.