What makes an organization valuable to society?

What value are large organizations bringing to society? And, when they are getting it right, how can and should corporations build trust and gain legitimacy within society? The University of St. Gallen in Switzerland has developed a “Public Value Scorecard” (PVSC) to help organizations understand and increase their value to society.

Corporations need a better sense of society’s expectations. They need management tools to treasure public value and constantly monitor how things evolve over time. In particular, a common framework is needed that allows for a language that is robust enough to systematically give different world views and value systems.

Corporations need a better sense of society’s expectations. They need management tools to treasure public value and constantly monitor how things evolve over time.

At the University of St. Gallen in Switzerland, a PVSC has been developed that helps organizations to understand and increase their value to society. The scorecard is based on psychological needs theory and allows for tailor-made indicators in five dimensions.

The PVSC is applied both for internal or external groups, stakeholders, investors or customers. It systematically generates management information on what it means to contribute to society at large. Following current insights in academic psychology, it measures impacts against people’s basic needs that cannot otherwise be captured. In this way, public value is created when a company’s action (e.g., via its products or services) leads to a positive evaluation of needs fulfilment.

For example, a major Swiss insurance company recently used the PVSC to better understand the societal implications of a specific M&A transaction; information that was, otherwise, not available. Fresenius Medical Care, a leading provider of dialysis products and services, used the scorecard to analyze the public value of its clinics, as perceived by major stakeholders. As a consequence, the PVSC is seen as the next improvement for the existing balanced scorecard. The soccer club FC Bayern Munich employed the PVSC to identify public values that may both foster and hinder growth in the next few years. As a Champions League winner, the club aspires to grow substantially, while maintaining its roots in the region.

High-performing organizations are ahead in treasuring their public value. They not only use it for their risk management, but link it to their value proposition. In summary, public value is a major chance to improve resilience and to grow and develop. What could be more attractive for leaders than to make a difference to society?

The complete article was written by:

  • Prof. Dr. Timo Meynhardt
    Managing Director, University of St. Gallen, Switzerland
  • Prof. em. Dr. Peter Gomez
    University of St. Gallen, Switzerland
  • Markus T. Schweizer
    Managing Partner Advisory Services EY, Switzerland

Read the full articlepdf664.73 kB

EY refers to one or more of the member firms of Ernst & Young Global Limited (EYG), a UK private company limited by guarantee. EYG is the principal governance entity of the global EY organization and does not provide any service to clients. Services are provided by EYG member firms. Each of EYG and its member firms is a separate legal entity and has no liability for another such entity's acts or omissions. Certain content on this site may have been prepared by one or more EYG member firms