Mission and Vision Statements

COMMON ELEMENTS
WRITING A MISSION STATEMENT
EMPLOYEE INVOLVEMENT
SWOT ANALYSIS
EVALUATION
BIBLIOGRAPHY

An organizational mission is an organization's reason for existence. It often reflects the values and beliefs of top managers in an organization. A mission statement is the broad definition of the organizational mission. It is sometimes referred to as a creed, purpose, or statement of corporate philosophy and values.

A good mission statement inspires employees and provides a focus and direction for setting lower level objectives. It should guide employees in making decisions and establish what the organization does. Mission statements are crucial for organizations to prosper and grow. While studies suggest that they have a positive impact on profitability and can increase shareholder equity, they also support that almost 40 percent of employees do not know or understand their company's mission.

Large as well as small corporations benefit from creating mission statements. Entrepreneurial businesses are driven by vision and high aspirations. Developing a mission statement helps the small business realize their vision. Its primary purpose is to guide the entrepreneur and assist in refining the planning process. By developing a strategic plan that incorporates the mission statement, entrepreneurs are more likely to be successful and stay focused on what is important. The mission statement encourages managers and small business owners alike to consider the nature and scope of the business. Business Week attributes 30 percent higher return on several key financial measures for companies with well-crafted mission statements.

COMMON ELEMENTS

While mission statements vary from organization to organization and represent the distinctness of each one, they all share similar components. Most statements include descriptions of the organization's target market; the geographic domain; their concern for survival, growth, and profitability; the company philosophy; and the organization's desired public image. The following is an example of a mission statement for a family dining restaurant chain:

Our mission is to become the favorite family dining restaurant in every neighborhood in which we operate. This will be accomplished by serving a variety of delicious tasting and generously portioned foods at moderate prices. Our restaurants will be clean, fun, and casual. Our guests will be served by friendly, knowledgeable people who are dedicated to providing excellent customer service.

This mission statement describes the target market, which are families and the geographic domain of neighborhoods. It clearly states how it expects to be profitable by offering excellent customer service by friendly, knowledgeable people. When defining the mission statement it is important to take into account external influences such as the competition, labor conditions, economic conditions, and possible government regulation. It is important to remember, however, that mission statements should not attempt to be too broad.

Companies should have mission statements that clearly define expected shareholder returns and they should regularly measure performance in terms of those expected returns. If the major reason for a business's existence is to make a profit, then it stands to reason that expectations of profit should be included in the organization's mission. This means that management should reach a consensus about which aspects of the company's profit performance should be measured. These might include margin growth, product quality, market share changes, competitive cost position, and capital structure efficiency.

A mission statement sets the boundaries for how resources should be allocated and what strategic and operational goals should be set. It should acknowledge the company's strengths and then inform employees where to direct their efforts in order to take advantage of those strengths.

Before writing a mission statement organizations should take a look at how they are different from the competition, whether it is in technology, image and name brand, or employees. It can often be thought of as a recipe for success because it not only defines the organization's accomplishments but it also provides employees with directions to help them develop plans and look for opportunities for improvement.

The organization defines what is acceptable behavior through the mission statement. Values and beliefs are the core of a strong mission statement. For example:

Quality and values will secure our success. We will live by our values, have fun, and take pride in what we do. Our values are to maintain a work environment where people enjoy coming to work, to serve our guests and exceed their expectations, and to be profitable and result oriented.

This mission statement is simple and straightforward. It does not, however, specify the products or target market. The mission statement also provides meaning to the organization by stating not only what goals the company wants to achieve but also why it wants to achieve these goals. It is not effective unless it is challenging and forces workers to establish goals and means to measure the achievement of those goals. A mission statement should inspire employees and get them involved in the organization. It has been called the glue that holds the organization together through shared values and standards of behavior. A mission statement should be relevant to the history, culture, and values of the company.

Many statements refer to the social responsibility of the organization. For example, a company can show their concern for the community in the following:

To be involved as good corporate citizens wherever we are around the world. We will treat customers and distributors with honesty, courtesy, and respect. We will respect and preserve the environment. Through all of this we will prove to be the worldwide leader in industry trade.

One important issue in organizations today is the concern with diversity. While it is not a traditional point included in mission statements, more and more companies are including it because of the globalization of the economy and the increased diversity of the workforce.

Before writing a mission statement, leaders in the organization must have an idea of what is in store for the future. This vision is the foundation for the mission statement. The vision provides a strategic direction, which is the springboard for the mission and its related goals. A vision statement differs from a mission statement. Vision statements are a view of what an organization is striving to become. For example:

To bring back to neighborhoods all over America the importance of family unity. We will view ourselves as a family so these attributes will be carried over into our service.

Vision statements guide an organization into the future while mission statements are a reflection of the present. Because vision statements are a glimpse into the future, they are often not realized for several years. Organizations go through many changes and can face times of confusion and uncertainty. Changes are not always expected or easy, so a well thought out vision statement will help everyone stay focused and meet the organization's goals.

The following are two examples of well-known companies' mission statements:

• Wal-Mart: “To give ordinary folk the chance to buy the same thing as rich people.”
• 3M: “To solve unsolved problems innovatively.”

Historically, these may have seemed arrogant. But consider the outcome of the following mission statements from each company's early days:

• Ford Motor Company: “Ford will democratize the automobile.”
• Sony: “Become the company most known for changing the world-wide poor-quality image of Japanese products.”
• Wal-Mart: “Become a $125 billion company by the year 2000.”

WRITING A MISSION STATEMENT

When creating a mission statement there are a few simple guidelines that can be followed. It is important to remember the basics so the mission statement stays simple and straight to the point. Some researchers, such as C.K. Bart, advise that it should be kept to between thirty and sixty words, while others believe it does not necessarily have to be that brief. Some organizations have mission statements that are only one sentence, while others are a paragraph.

An example of a mission statement that is limited to one sentence is “Our business is selling houses and our mission is total customer satisfaction.” At a minimum, each mission statement should answer the following three questions: (1) What are the opportunities or needs the organization addresses? (2) What does the organization do to address those needs? and (3) What principles and values guide the organization? In other words, the statement should define the organization's purpose, business, and values.

Avoiding jargon and buzzwords will keep the mission statement clear and easy to understand. It should be universal and simple to comprehend for all employees in the organization, and should also be unique and identify the organization. A mission statement is often what sets one company apart from the competition. It should outline the organization's competitive advantages and differentiate it from everyone else. Specific products/services offered as well as markets or customers should be included. Also a general business definition, behavioral standards, and desired competitive position can be added to a strong mission statement.

Jim Collins revolutionized the idea of the mission concept in his 2001 book Good to Great, where he introduced the hedgehog concept. The hedgehog concept is, according to Collins, “a simple, crystalline concept that flows from deep understanding.” The concept is formed from the combination of three definitions—what you can be best in the world at, what drives your economic engine, and what you are deeply passionate about. Collins proposes that businesses often fail because they do not ask the right questions, prompted by this three-in-one concept, and because they build their mission “more from bravado than from understanding.” The hedgehog concept and its three components form an alternative method for creating a focused mission statement.

There are also several software programs designed to help start-up companies create their mission statements and build goals. Once such program is Business Plan Pro, although there are many to choose from.

Nonprofit businesses must take special care in composing their mission statements. Peri Pakroo, in Starting and Building a Nonprofit, advises that nonprofit organizations create very well-defined mission statements at the outset so that their activities and programs have clear goals. Since nonprofit organizations are usually centered around a clear goal, humanitarian project, or particular meaning, it is vital that they have a mission statement supporting their company.

EMPLOYEE INVOLVEMENT

It is often helpful to allow company-wide input when creating a mission statement. This “bottom up” approach results in greater commitment to the organization, and a better understanding of the organization. Employees from throughout the organization can help identify the core values of the company.

In order to encourage employee participation, many companies have created competitions inviting employees to submit suggestions. Cash prizes are sometimes provided as an incentive for creative and inspirational statements. Some companies find it useful to invite customers to assist in writing a mission statement because they can provide an honest perspective. Mission statements from other companies may also be reviewed to provide ideas.

It is important to keep in mind that there will be a draft process involved in creating the mission statement. Employees can often provide invaluable insight on how to improve on each draft. In the end, the mission statement should reflect the personality of the organization. Thus, each company should be creative and unique in developing its own statement.

Creating a mission committee that consists of members of management, frontline employees, and customers is another way to begin writing a mission statement. The major benefit of this strategy is the inclusion of all areas of the organization to ensure that everyone is represented. Another benefit is that employees will be more willing to work toward accomplishing the mission if they know they had a voice in its creation.

Jim Collins noted the effectiveness of creating what he termed “the Council.” The Council is a circle of employees usually found in successful companies who focus on the three questions of the hedgehog concept—what can they be best at, what are they passionate about, and what can drive their economic engine—and use their understanding to form mission statements, goals, and vision statements for the future. The Council is often an informal body, five to twelve members, and can be

composed from nearly any position in the company. Collins notes the organic qualities of such bodies and recommends them for important decision making.

A “top down” approach can be effective in smaller organizations or even sole proprietorships. There is less time involved in creating a mission statement when it comes from the top. Also, many times frontline employees and lower level managers lack the insight necessary to see the big picture. They may not be able to conceptualize the entire organization and therefore miss important aspects of the business.

Participation may not always be a good option for small businesses. In small businesses that are started by entrepreneurs the mission statement is generally a vision of an individual and therefore may not be negotiable. When the mission statement comes from upper management, employees are more assured of the organization's commitment to the statement.

A word of caution should be noted when deciding whether to adopt a top down or a bottom up approach. If the mission statement is to be created with a wide variety of input from both employees and customers then it will take longer than a top down approach. There must be a sharing of views and ideas with compromises made.

A consensus should be developed without the problems associated with groupthink. There is always the possibility that too much compromise will distort the mission statement and the end result is something different from the original intent. The top down approach is not always effective because it rarely consults employees when making important decisions. Therefore, although it is the fastest route to take it is not always the most effective.

While the mission statement should be able to change with the times it is also understood to have a certain degree of permanence. As new businesses begin to grow and hire more employees the mission statement should provide a strong sense of stability and a clear definition of the culture.

A mission statement is worthless unless it has the support of the employees in the organization. It will only be successful if each employee commits to its success and internalizes it.

Once the statement is completed it is extremely important that the organization not put it on the shelf to collect dust. It should be shared with the entire company. The introduction of the mission statement should come directly from top management in order to set the example.

Organizations should be creative in making employees aware of the mission statement. Placing it strategically in locations where employees gather will increase awareness and remind them of the goals of the organization. Videos outlining the details of the new mission statement are often useful; however, it is critical that employees have the opportunity to discuss the statement with members of management.

Setting up meetings with members of management and frontline employees can often help uncover areas where the company does not meet the standards set by the mission statement. Communicating the mission statement to customers will make them feel valued and important. The mission statement can be sent to customers in a mass mailing or posted on signs in areas those customers frequent. It sets forth the goals of the organization so customers know what to expect when doing business with the company.

In his 2007 book 101 Mission Statements, Jeffrey Abrahams suggests that companies can go even further and address themselves to specific groups within the mission statement. They can refer to these target audiences as headings. Some of the examples Abrahams gives include: “To our staff …” “To our employees …” “To our customers …” and “To our colleagues …” For the mechanics of the statement, various analyses can be used, such as the SWOT analysis, discussed next.

SWOT ANALYSIS

SWOT is an acronym for strengths, weaknesses, opportunities, and threats. SWOT analysis is a strategic planning tool that helps an organization match its internal strengths and weaknesses with external opportunities and threats. SWOT analysis is important and useful in creating and executing the organization's mission statement. Often the best strategies for accomplishing the organization's mission are revealed through the SWOT analysis. The best strategies are those that take advantage of strengths and opportunities, offset threats, and improve weaknesses.

Organizations should first begin by reviewing internal strengths and weaknesses. When analyzing an organization's strengths it is important to identify distinctive competencies or strengths possessed by only a few competing firms. These distinctive competencies often become the competitive advantages that are included in the mission statement. Distinctive competencies can be found in financial resources, quality products and services, proprietary technology, or cost advantages. Organizational weaknesses are skills and capabilities that prevent an organization from implementing strategies that achieve its mission. They can be problems with facilities, lack of a clear strategic direction, internal operating problems, too narrow a product line, weak market image, or the inability to finance changes.

The next step is to identify external opportunities and threats. Organizational opportunities are circumstances in an organization's environment that if capitalized on will result in above normal increases in economic performance. Examples of opportunities are related to the possibility of adding a new product line, increasing market growth, or

diversifying into related products. Threats are viewed as circumstances that give rise to normal or below normal economic performance. They can be found in the ease of entry of competitors, increased sales of substituted products, demographic changes, slowed market growth, or increased competition.

EVALUATION

Evaluation of the mission statement is necessary to ensure the organization is meeting its goals. If needed, new goals may have to be created in order to accommodate changes in the organization. It may be time to reevaluate what the organization is doing or where it is headed. This is a good time to think about entering into new areas or to begin doing things differently by rewriting part or all of the mission and vision statements.

It should be noted, however, that the stronger a mission statement is, the less it will need to be changed as the company progresses with time and technology. In a 2008 article, Inc. Magazine writer Professor Jay Ebben suggests that one of the questions mission statement creators should ask is, “What do we do?” This question, according to Ebben, should be answered in a psychological way in terms of meeting intrinsic customer needs so that the company and its products or services can evolve with time.

In evaluating an organization's performance, management must look at several different aspects of the organization. First, managers need to determine if the organization's plans are clearly linked to its mission statement and related goals. Plans should be developed for both the short run and long run. Secondly, assigning jobs that are directly related to the achievement of organizational goals will help ensure they are attained. The goals should be communicated clearly so employees understand what tasks need to be carried out and what the rewards will be. Finally, when evaluating individual performance, the information gathered should be recent and compared to established standards.

Mission statements are often difficult to evaluate because of their abstract form. Poor mission statements are not directly measurable and are vaguely worded. Figure 1 presents an example of how mission statements can be measured from the top of the organization to the bottom. Strategic goals are directly tied to the organization's mission statement and apply to the organization as a whole. Tactical goals are departmental goals that support the strategic goals. Finally, operational goals are written at the individual level. Each one of these makes it possible to measure the organization's mission statements. An organization's likelihood of accomplishing its mission is increased as it creates strong and measurable goals at each level.

It is not necessary that the mission statement be measured in quantifiable terms. It may also be measured qualitatively. For example, “We will answer all of our customers' questions and if we do not know the answer, we will find out.” While this is not a quantitative statement it can be measured by monitoring customer service

calls and setting operational goals for employees that revolve around follow up and thoroughness.

Mission and vision statements give organizations a focus and a strategy for the future. According to Bart and Tabone, they have become the cornerstones of organizations. They contribute to an organizations' success and can lead to increases in productivity and performance. They do not have to be reserved for the entire organization—each department or division can benefit from developing a mission statement, as long as they are not in contradiction to the company's overall mission. Preferably, an individual department's mission links it to the fulfillment of the overall company mission. Mission statements for functional departments provide the same benefits as they do for the entire organization.

In conclusion, mission statements provide a sense of direction and purpose. In times of change and growth they can be an anchor and a guide in decision making. The benefits far outweigh the disadvantages and challenges when looking at the potential for increases in profitability and returns. Defining an organization by what it produces and who it satisfies are major steps towards creating a sound and stable mission statement. Setting a company apart from the competition is probably one of the biggest advantages.

SEE ALSO Strategic Planning Failure; Strategic Planning Tools; Strategy Formulation; Strategy Implementation; SWOT Analysis

BIBLIOGRAPHY

Abrahams, Jeffrey. 101 Mission Statements from Top Companies: Plus Guidelines for Writing. Ten Speed Press, 2007.

Bart, C.K., and J.C. Tabone. “Mission Statement Rationales and Organizational Alignment in the Not-For-Profit Health Care Sector.” Health Care Management Review, Fall 1998, 54–69.

Collins, Jim. Good to Great. New York: Harpercollins Publishers, 2001.

David, Forest R., and Fred B. David. “It's Time to Redraft Your Mission Statement.” Journal of Business Strategy, January/February 2003, 11–14.

———.“Does Your Mission Statement Generate Results or Laughs?” Pay for Performance Report, October 2002, 6.

———.The Drucker Foundation Self-Assessment Tool: Process Guide. San Francisco: Jossey-Bass Publishers, 1999.

Ebben, Jay. “Developing Effective Mission and Vision Statements.” Inc.com Mansueto Ventures LLC, 2008.

Karcher, J.N., et al. “The Bottom-Up Mission Statement: A Competitive Strategy for Midsized Accounting Firms.” CPA Journal, June 1997, 36–40.

Miller, P.F., Jr. “Needed: A Mission Statement for Directors.” Directors & Boards, Summer 1997, 27–30.

———.“Mission Statement Myopia.” Training, December 2004, 16.

Pakroo, Peri. Starting and Building a Nonprofit: A Practical Guide. Berkeley, CA: Nolo, 2007.

Radtke, Janel M. Strategic Communications for Nonprofit Organizations: Seven Steps to Creating a Succesful Plan. Indianapolis: John Wiley & Sons, Inc., 1998.

Robbins, S.P. Essentials of Organizational Behavior. Upper Saddle River, NJ: Prentice Hall, 1997.

Wickman, P.A. “Developing a Mission for an Entrepreneurial Venture.” Management Decision, May-June 1997, 373–381.

Yeargin, B. “Creating the Mission Statement.” Boating Industry, May 1996, 47.