Corporate Mission Statements:
A Strategic Management Issue
By Leann Cardani
The Mission Statement is a crucial element in the strategic planning of a business organization. Creating a mission is one of the first actions an organization should take. This can be a building block for an overall strategy and development of more specific functional strategies. By defining a mission an organization is making a statement of organizational purpose. I will define mission statements, specify their importance, discuss important factors of mission statements, and give a process to follow in their development.
Defining a mission statement is the first step in this discussion. There are several ways that mission statements are defined. Some people get a vision statement confused with a mission statement. "A vision statement pushes the association toward some future goal or achievement, while a mission statement guides current, critical, strategic decision making," (Drohan, 1999). In The Mission Statement Book by Jeffrey Abrahams, TRINOVA Corporation defines a mission statement in the following way, "A mission statement is an enduring statement of purpose for an organization that identifies the scope of its operations in product and market terms, and reflects its values and priorities," (Abrahams, 1995). Christopher Bart a leading researcher in the art of mission statements says,
"A good mission statement captures an organizationís unique and enduring reason for being, and energizes stakeholders to pursue common goals. It also enables a focused allocation of organizational resources because it compels a firm to address some tough questions: What is our business? Why do we exist? What are we trying to accomplish?" (Bart, 1998).
Stone gives another definition extracted from Say and Live it: The 50 Corporate Mission Statements That Hit the Mark. "Corporate mission statements...are the operational, ethical, and financial guiding lights of companies. They are not simply mottoes or slogans; they articulate the goals, dreams, behavior, culture, and strategies of companies," (Stone, 1996). Basically, a mission statement is designed to say exactly what the organization anticipates it will achieve.
"Every company no matter how big or small, needs a mission statement as a source of direction, a kind of compass, that lets its employees, its customer, and even its stockholders know what it stands for and where its headed," (Abrahams, 1995). A mission statement gives everyone the opportunity to know what the organization is about and what it is not about ("Thinking Ahead," 1998). With this in mind an individual is able to decide if this mission is something that they can commit to ("Thinking Ahead," 1998). A well-developed mission statement offers several potential benefits. These benefits include direction, focus, policy, meaning, challenge, and passion ("Thinking Ahead," 1998). Direction states what the organization does and what it wants to be successful in ("Thinking Ahead," 1998). Focus concentrates on the companyís strengths and competitive advantages and tells people how to obtain them ("Thinking Ahead," 1998). Policy is a guideline of what a company finds acceptable and unacceptable and states organizational values ("Thinking Ahead," 1998). Meaning shows what a company strives to achieve and why they wish to do so ("Thinking Ahead," 1998). Challenge is the setting up of goals and measurements of achievement for employees ("Thinking Ahead," 1998). Passion makes everyone involved with the organization show feelings of enthusiasm, pride, and commitment ("Thinking Ahead," 1998). With all of these benefits it is amazing that some organizations do not establish a well-developed mission statement. However, if a good mission statement is developed it will not be effective if every member of the organization does not know how the mission will be accomplished (Bailey, 1996).
There are some basic elements that should be incorporated into a mission statement. To begin with, the target audience is important (Abrahams, 1995). It needs to be established whom the mission statement will be directed to. Some groups that may be considered are employees, stockholders, customers, and the community (Abrahams, 1995). The mission statement can be targeted at a combination of these groups or just one of them. Next, the length of the mission statement needs to be considered. Some companies mission statements are only a single sentence and others are very long including visions, philosophies, objectives, plans, and strategies (Abrahams, 1995). "All thatís necessary is that the mission be long enough to reach the target audience," (Abrahams, 1995). In addition, the tone is also important. In this aspect it is important to use appropriate language that is directed to the target audience and reflects the makeup of the organization (Abrahams, 1995). Establishing the correct tone involves a process of intentional, individual word selection (Abrahams, 1995). If you make the language too flowery and cumbersome a great mission statement may not be taken seriously (Drohan, 1999). "A mission statement should be written to encourage commitment and to energize all employees toward fulfilling the mission" (Stone, 1996). Endurance should also be considered. "Mission statements should serve to guide and inspire the organization for many years," (Stone, 1996). The mission statement should be able to withstand time and ultimately have a meaning in the long-term standings of the organization. In the same respect the mission statement should also remain current. A mission statement created years ago may no longer be effective (Stone, 1996). When the competitive environment changes the mission should be revised (Stone, 1996). Finally, it should consist of an element of uniqueness (Stone, 1996). An organizations mission statement should be unique to the organization. It should portray the individuality of the company (Stone, 1996).
In considering specific components of a mission statement, Bart tracked the correlation between twenty-five items and company performance measured by financial measures (Bart, 1998). This research indicated that not just any mission statement will do. Bart found six items that are consistently linked to firm performance (Bart, 1998). These are a statement of purpose or general nonfinancial goals, a statement of values, specification of behavioral standards, identification of the organizationís competitive strategy, a statement of vision, and an expression of intent to satisfy the needs and expectations of multiple stakeholder groups (Bart, 1998). Companies that had mission statements that included these items showed higher performance than companies that did not use these components in their mission statements. This research indicates there is a strong correlation between performance and well-developed mission statements.
Developing a mission statement can be a very difficult process. Drohan says that when creating a mission statement it should be done as part of the strategic planning process for the organization (Drohan, 1999). This process should be started with and environmental analysis, followed by development and prioritizing goals and objectives (Drohan, 1999). After this process is finished, the mission of the company becomes clearer and an effective mission statement can be created (Drohan, 1999). Then, you need to decide who is going to write the mission statement (Abrahams, 1995). A mission-writing committee should be set up to perform this duty (Bailey, 1996). It can be either a group of only management members or a more diversified group of members from different areas in the corporation. It is more effective to use a committee made up of management and nonmanagement personnel (Bailey, 1996). "The organization may lose valuable input by limiting the voices it is willing to hear; also, people may be more willing to carry out a mission that they helped develop,"
(Bailey, 1996). The committee should also include people from outside the organization (Bailey, 1996). These people may include customers, suppliers, and other interested parties (Bailey, 1996). Several different perspectives are important to be considered in developing a mission statement. By using different perspectives in the development the final product will be directed so each individual can comprehend the mission (Bailey, 1996). After a situation analysis and all the important factors are considered, the selected committee is ready to draft the mission statement. When the draft is complete it should be shared with all members of the organization (Stone, 1996). If agreement is established it is time to communicate the mission statement (Stone, 1996). In this process the form and structure the mission statement will take is decided (Stone, 1996). This form may include an annual report presentation, a copy printed on fancy paper and hung on a wall in a frame, a brochure, an engraved granite piece, or any other form (Abrahams, 1995). It is also important in the communication process to introduce the mission statement to all the employees and ask for suggestions on implementation (Stone, 1996) The final step is to operationalize the mission statement. In order to do this, the company needs to make its strategies, tactics, and operations remain consistent with the mission statement (Stone, 1996). The mission statement should be translated into performance objectives and used as a basis for strategic planning (Stone, 1996).
Effective mission statements can be a great asset to an organization. When everyone is working together in a defined manner greater organizational purpose is achieved. A mission statement is a stepping stone in the strategic planning process. It is important that when an organization implements a mission statement they apply it to their functional strategies and consider input from various groups.
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