In economics we speak of something having an economic value, which is very often determined by the price mechanism in the market. We also speak of one of the functions of money as being a measure of value.

There are many who attach a great deal of importance to the question of economic value as it presupposes efficiency. Maximising value implies maximising economic efficiency.

Understandably, it is difficult to measure economic value unless one uses an objective yardstick such as money.

However, value also has a number of other aspects, which are qualitative in nature and as such, money may not necessarily be a perfect measure of economic value.

In the world of finance, we speak of shareholder value and the need to maximise such value. It implies that the ultimate measure of a company’s success is the extent to which it enriches shareholders. Shareholder value is that part of the capital of the company which is equity, as opposed to long-term debt. It is commonly believed that directors’ primary responsibility is to boost share prices, as that will increase shareholder value. However, there are also those who argue that directors’ top priority is to benefit the company – which does not always mean a higher share price.

Another term that is used in both economics and corporate finance is value added. In corporate finance, economic value added represents an estimate of a firm’s economic profit – the value created in excess of the cost of capital required return of the company’s investors (shareholders and debt holders). In economics, gross value added (GVA) is a measure of the value of goods and services produced in an area, industry or sector of an economy. Again, in all cases, we use money as our yardstick to measure such value.

However, in the business sector, we also speak of values – both individual and corporate values. The word values is the correct plural of value. However, when we speak of individual and corporate values, this has nothing to do with the plural of value. Corporate values are the principles that guide the way a company behaves in and relates to the outside world, as well as its internal relationships. So they represent what the company’s priorities are and what leadership really believes in.

Individual values, even at the place of work, are akin to corporate values. They form the cornerstone of all that we do, think, believe and achieve. Our personal values define how we spend our time, if we are truly living our values. A corollary to this, which also provides a link to corporate values, is spiritual leadership, which reflects our ability to transmit clearly our own values and our direction on to others. At times, we need to sacrifice economic, financial, market, or shareholder value, in order to safeguard our own and the corporate values.

Next week is Christmas – for most of us it is a time of giving and of the happiness one receives when giving. It may also be a good time for business leaders to reflect whether their personal and corporate values reflect good citizenship, fairness, respect, dignity and ethical behaviour.

Just consider this point: in this country we have a situation where the main institutions have been let down by the behaviour of some of their members. This year the political class emerged damaged thanks to the antics of a couple of parliamentarians. The judiciary has lost trust because of the accusations made against two of its members. The Catholic Church is wounded because of the illicit behaviour of a handful of priests.

This has happened in spite of the good work done by their leadership and most of their members. These three institutions, together with the business sector and the family, form the basis of civil society. Until such time as these institutions regain their position of trust in our society, it is up to business leaders to fly the flag of positive values, irrespective of economic value.

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