An organization can create shared value by re-conceiving its products, services and its market. This is done with the aim of meeting different societal needs that are ever-growing and changing with every generation. This is achievable without any damage to the environment, thus ensuring that resources and future of the next generation are assured. This not only preserves the resources to be used in the future, but also takes care of the possible market in the form of the next generation. An example of re-conceiving of products is a move taken by various food-manufacturing companies, such as Unilever. Unilever has opted to ensure that its foodstuffs meet recommended nutritional value for both the elderly and young. Such a move sustains the generations, thus ensuring that the demand for its products is ever-increasing. This is a move that benefits both the organization and the society.
Shared value can also arise when the line between profit and non-profit is blurred. This is a move that makes the society form a perception that organizations are interested in the value of their services rather than in the profits they make. Blurring of the line between profit and non-profit can arise after creation of hybrid industries, such as Water Health International. Such industries make little profits and concentrate on the quality of the services they provide to the society. It is noteworthy that organizations ought to invest in environmental movements, energy conservation and employee skills to attain the benefits of shared value.
Shared Value in Comparison with the Old System of Short-Term Targets
A comparison between firms that do not embrace shared value and those that do shows a large difference in terms of sustainability, integrity and opportunity. Firms that do not consider the society, have short-term targets of maximising the profits that they make. Such targets involve activities, such as relocation to cheap labour communities and reduction of employees, to cut operational cost. This approach focuses on price competition with other companies but leads to a slowed rate of growth, as well as a reduced level of creativity and innovation among the employees. Employees who run such companies live in fear due to the insecurity of their jobs and the low wages they are paid. Such a culture retards the general growth, thus affecting sustainability and the level of integrity of the employees. It also reduces opportunities that would have arisen from innovations and creativity. The communities in which such organizations operate believe that the profits made by such organizations come at their expense. Such effects are mostly felt in local banks that operate in less developed countries. Such banks subject clients to high interest rates and other charges, leading to high profits that are realized even in times of a global economic crisis. Some companies perceive their status as being global organizations, thus ending up neglecting the needs of the societies within which they operate.
Shared value ought to target various problems to ensure that sustainability, integrity and opportunity are achieved. Among these problems are inadequate level of knowledge in the society, poor technology, labour market turbulence and the issue that surrounds globalization of organizations. Knowledge intensity ought to increase beyond individual efforts observed in the society. Organizations ought to participate by investing in knowledge intensity, which would benefit such organizations in the future. An example of such an act in developing countries is what takes place in Kenya, Africa. Equity Bank of Kenya gives out scholarships to needy and bright students in Kenya, who end up being managers and forming the technical staff of the same bank on completion of their studies. Such acts not only increase the level of integrity of the society, but also that of the employees of the bank. It also ensures sustainability of the bank through the innovative and reliable personnel that the bank creates for itself.
Shared value ensures sustainability of the business in the competitive field and creates opportunities that a business or organization would not have realized without sharing its value with the society. It also promotes the growth of integrity among its employees in terms of performance and leadership. The integrity of the society in terms of the way it relates with the organization also grows, thus having an impact on the final outcome of shared value.
Whitley Richards article, “U.S Capitalism: A Tarnished Model?” cab be best used to describe sustainability. In the article, Whitley uses the example of the U.S model of capitalism that that was regarded as the ideal approach of corporate firms. However, the collapse of the U.S system of finance means that the system could not go through the current wave that drives the economy of the world (Whitley, 2009). Sustainability is the time at which the effects of the activities of the organization persist. In the past, organizations sustained their high profits by neglecting the effect of their activities on the future generation of the communities in which the firms operated. Such activities entailed depletion of resources, pollution of the environment and relocation of firms to regions with cheap labour. Such moves led to the erosion of societal needs, a move that led to high profits accompanied by adverse effects to the societies. Labourers were made to work hard, but companies that relied on their energy only enjoyed the fruits of their efforts. Under such a system, sustainability is not achievable. The future of such companies is bleak; since they deplete the resources and pollute the same environment they rely on to produce their goods and services.
The idea of enjoying cheap labour and exploiting the members of a community is a short-term target that does not take into account the continuity of the business. This is because the same members of the society who are deprived of good remunerations and wages are expected to be potential consumers of the goods or services that the company produces. This is a move that limits the demand for such goods and ensures that the market of such goods and services does not grow, since only a few of those in the society can afford the goods. The problem arises because the organization underpays its employees to the extent that they cannot afford what they take part in producing. This is projected to lead to a stagnant business organization that never grows due to the low purchasing power that its employees and the society enjoy.
In the past, companies avoided expensive labour in some societies by relocating to other less developed communities that provided cheap labour. Such companies made large profits that arose as a result of the low cost incurred in the production of the goods in relation to the high prices that the companies charged for the same goods to different communities. Such companies survived by relying on the les developed societies. However, such a move is a short-term target that does not take into account the future of their company when the less developed societies cope with their problems and join the developed countries. Such companies will finally lack the cheap manpower which will result in low profits and downward spiralling collapse of the organizations.
Despite the readily available cheap labour and resources that were up for grabs by the companies that did not appreciate the need for shared value, competition existed among the companies for limited resources and manpower. The numbers of such companies increases naturally, while the resources and labour that such companies compete for remain constant or keep depreciating. Eventually, they reach a point when there is no more to grab or compete for, and thus face a slow-down in the rate of production and profit-making. This results in the collapse or stagnation of a company that relied on such services and resources to make large profits.
Nowadays, tight competition and limited resources require shared value to curb stagnation and ensure sustainability of business organizations. Sustainability is only achievable through continual growth that is brought about by incorporation of shared value in business organizations.
Within a system of shared value, sustainability is achievable through a balanced operational, integrated operational and integrated strategic approach. The balanced operational approach explained by Clobert and Kurucz involves investing in a trade-off management that is aimed at maximizing the value of an organization in terms of the quality of those who run the business. This quality of management reflects the quality of the business and raises the shareholder value, thus ensuring that shareholders and any parties related to the business are aware of the value and quality of the business they are associated with. This is achievable through several management approaches that include a balancing act between the interests of competing parties, both internally and externally. The managers engage in fruitful dialogue and agreements with stakeholders, which sustains them in terms of difficulties and leads to their growth when the business is operating normally. Such leaders are also transparent and open, thus making those who work under them have a sense of security and freedom that enable them to give out their best in terms of services and production. This provides a working culture within the organization that sustains its performance in different generations without deterioration or failure of the business. Another area that the management deals with to balance the operational approach is the technical area, which requires skilled personnel. The management invests in the skills of the society and employees for both short-term and long-term benefit of the company. The technical skills are invested into through regular trainings for employees, scholarships to talented members of the society and mentorship programs that prepare future managers of the organization to enhance the idea of sustainability.
An integrated operational strategy ensures the organization sets up a team of management for the purpose of creating simultaneous value among stakeholders and parties involved in the running of the business. This is achieved through creating and sustaining a business capable of competing on equal terms with its rivals. Apart from the competitive advantage, the company enjoys a positive reinforcement to build the corporate image of the company that sustains its growth and reputation over a prolonged period. The strategy uses sustainability framework as a basis for identifying and using the strength that the organization might use for growth and development. The same strategy focuses on a culture that brings together different ideas through cumulative thinking of its management and shareholders. Decisions made due to such cumulative efforts are aimed at sustaining and assuring the future of the company, rather that appeasing the shareholders on a short-term benefit.
Strategic human resource management also helps in ensuring sustainability of a company amid its attempts to incorporate shared value in its system. It does this by helping to achieve consensus on the conception of sustainability within a business organization. It also builds a momentum for change, when a reinforced human resource management establishes a working culture that later becomes part of the organization.
The procedure of implementing the strategic human resource management starts with organization development or a change management that initiate the original idea, of change and development. This is achievable if a facilitated dialogue that reflects upon the past and prepares for the future is made. Such dialogue within the organization management band all the involved about force is precedes an actions that integrates sustainability into formal change in the organization.
Upon the completion of the initialization stage through dialogue and initiation of the change, support is needed to ensure sustainability of the ideas at an early stage. The human resource manager needs to anticipate probable outcomes and sufficient capital to sustain the move. The next step involves talent management within the staff which ensures that existing creative minds are nurtured and sustained for the future of the company. The talent management process involves recruitment of talents from the society and their integration within an organization. This ensures talent growth that is reflected in the performance of the community. Talent segmentation follows the standard procedure and takes place with respect to dialogue that focuses on the sustainability of talent and performance in the company.
These human resource strategies are finalised by a training and development step that infuses the mentoring program into the identified talents in the organization and entire society. The mentoring program goes hand-in-hand with the career development program that trains one specialist in a given field of interest. This becomes essential for the future development of the company and society as a whole. The whole procedure of human resource strategy works in a way that sustains social ethics, environmental needs, as well as economic goals of an organization. Fulfilment of all these goals helps achieve the desired goal of shared value for the benefit of both the society and business organizations. All this claims about the need for sustainability of a business agree with Rachael Shwom’s article, Strengthening Sociological Perspectives on Organizations and the Environment. Shwom put it that no organization can socially or ecologically survive as an island. Organizations and the society depend on each other thus forming a relationship that must see each of the parties support the other for growth and development (Shwom, 2009).