Creating value in the common interest for the welfare of the individual and society. That is the essence of Public Value, Gerwin Nijeboer, expert for EY Netherlands, tells us. Here’s how he defines public value:

“Public Value is some kind of license to operate, but exclusively from the perception of the public, an audience that takes an increasingly critical stance and can no longer be denied.

The concept of Public Value describes the contribution that any organization or corporation makes to society from the perception of the public. The starting point is that such perception is reality. More and more organizations are showing interest in Public Value, but the concept is relatively new, sometimes misunderstood, and can therefore be confusing.

A first misunderstanding is the idea that Public Value applies only to public organizations. That is emphatically not the case. It also affects listed companies, corporations of all sizes and institutions of various legal forms. You might not expect it, but one of the organizations that pioneered Public Value a few years ago was the football club FC Bayern. The German club asked prof. dr. Timo Meynhardt, connected to St Gallen University and an authority in the field of Public Value, to support the development of a new growth strategy aimed at global sporting and financial success. The assignment to Meynhardt was to help them become a global player without any alienation from their traditional Bavarian hinterland. Following FC Bayern, the football club RB Leipzig recently also had this assignment carried out by Meynhardt.

There is a second misunderstanding. Public Value is often thought to be the umpteenth new paradigm in the list of Shareholder Value, Customer Value, Shared Value and/or Corporate Social Responsibility. Nothing could be further from the truth. Many control paradigms have the disadvantage that there is too much emphasis on one particular aspect, with which other perspectives are left out of consideration. The core of Public Value is that it is a multidimensional concept that integrates the one-sided approaches to all those other paradigms.

The psychology of public value

For a brief scientific foundation of Public Value, Timo Meynhardt explains that two elements form the basis of the concept; (a) you have to be valuable and (b) enjoy trust from the perspective of the general public. To make Public Value measurable, Meynhardt developed a scorecard, based on psychology, that measures the Public Value of each project, decision or transaction along five dimensions: utilitarian, hedonistic, moral-ethical and political-social, of which the utilitarian dimension is divided into an indicator of usefulness and a financial-economic indicator. Visualized, the scorecard takes the form of a pentagon (spider web).

This scorecard can be used in several ways. It may involve the evaluation of a service or product, the impact of a proposed initiative, the reconfiguration of a process or even a complete institution. With the outcomes of the scorecard you can then prioritize risks and opportunities, screen needs or explore what an organization actually contributes to a well-functioning society.

Corporate reputation

Companies and institutions are wise to really put this theme on the management agenda. The corporate scandals of the 1990s and the subsequent financial crisis have caused a divide between corporations and the general public. This means that corporations’ reputation has come under a magnifying glass., in which the critical treatment of the public can cause new products to fail and ultimately even endanger the survival of organizations.

This awareness is not yet common, but it is expected to change quickly. Especially the fact that Public Value integrates all other control paradigms is an aspect that, according to my own personal experience, resonates with the market. Companies and institutions begin to understand that Public Value is not just another management trend, but an essential basis for your license to operate. Who can afford to ignore the attitude of the general public at this time? Especially for those who realize that younger generations primarily measure the relevance of organizations to their purpose, their social contribution, and not only to their prices or delivered quality.

Just like people, organizations want to be respected, they do not want to be condemned, humiliated or ignored by an audience that has withdrawn its trust and positive attitude.”

Gerwin Nijeboer works as a consultant at EY Netherlands. He specializes in Public Value and the Public Value Scorecard methodology. In cooperation with Prof. Timo Meynhardt, he currently focuses on developing Public Value further by creating awareness of the Public Value theory and the Public Value scorecard as well as developing them into a wider and more practical approach, combining scientific theories with practical use. This text is translated from a publication he wrote in Dutch for EY Public Class Magazine, June 2017. Please add your comments below. We look forward to hearing from you on what public value means to you!