Source: Business Horizons, Nov/Dec2000, Vol. 43 Issue 6, p23, 6p
Author(s): Bartkus, Barbara; Glassman, Myron; McAfee, R. Bruce
Mission statements have become one of the most common of all management tools. A study by Boston-based Bain & Company and the Planning Forum (Krohe 1995) found that nine of every ten of the 500 firms surveyed had used a mission statement sometime in the previous five years.
What Is a Mission Statement?
According to Ireland and Hitt (1992), the aim of mission statements is to publicly declare the purpose, goals, products, markets, and philosophical views of the organization. They also assert that mission statements can be motivating and inspiring. Dalrymple and Parsons (1995), advise that mission statements should cover four areas: product line definition, market scope, growth directions, and level of technology. Davies and Glaister (1997) maintain that a firm should combine a statement of its purpose with some form of inspirational vision for its future. Miller (1998) states that obligations to stockholders and sources of competitive advantage should also be included (in addition to the scope of the business and a view of the future). Lucas (1998), prefers the term "vision statement" for a company declaration phrase that not only encompasses the core values, core competencies, and future goals, but inspires, guides, and controls as well.
In practice, mission statements often reflect vague generalities rather than the specifics suggested by these different viewpoints.
Seattle City Light had, as its mission statement: "the most customer-focused, competitive, efficient, innovative, and environmentally responsible community-owned utility in the United States by the year 2000." Sbarro, Inc., a restaurant chain, created a mission statement that is very specific, adhering more closely to the guidelines for mission statements previously described. Sbarro's mission is to "deliver high-quality, affordably priced Italian food products to a wide range of consumers."
Presumed Benefits of Mission Statements
Four of the most frequently cited advantages are:
1. To communicate a sense of the firm's direction and purpose. Some feel that only by having a mission statement can a firm develop coherent short- and long-range goals, objectives, and plans. By reading a firm's mission statement, employees, stockholders, and customers will know where the firm is headed.
2. To serve as a control mechanism to keep the firm "on track." Mission statements help keep a firm from wandering into unrelated businesses and pursuing unrelated objectives. They serve as boundary lines for making decisions.
3. To help in making a wide range of day-today decisions. When new or nonroutine decisions need to be made, mission statements can be used as decision criteria, steering employees in the right direction.
4. To inspire and motivate employees. Mission statements give meaning to work and provide a shared sense of purpose. They help workers realize the broader purpose of their efforts and encourage them to place that purpose ahead of their own self-interests.
What's Wrong With Mission Statements?
In evaluating mission statements, it is important to differentiate between the need for a firm to have direction and the expectation that a mission statement will really guide employees' beliefs or behaviors.
In developing a mission, the traditional method has been to use SWOT analysis, which involves examining a firm's strengths, weaknesses, opportunities, and threats. The mission is to create a "fit" between available resources and external opportunities. In this sense, mission statements are beneficial to most firms because it requires that they examine and clarify their operations and goals. However, it is in the use of mission statements that most of the problems arise.
1. To communicate a sense of the direction and purpose:
The question is, does communicating yet one more statement of purpose -- and a very general one at that -- contribute any further important information? It would appear that for most employees and stockholders, mission statements are simply redundant. These groups already know where the firm is headed, and, through their knowledge of policies, rules, regulations, and plans, in much greater detail than provided bymission statements.
Further, to the extent that mission statements reflect a firm's intended actions, they may have negative competitive consequences. By publicizing its direction and purpose, a company may be providing competitors with information they can use to their advantage.
2. To serve as a control mechanism for keeping the firm "on track":
Advocates of mission statements argue that they act as boundary lines and keep firms from straying "off track." Unfortunately, the boundaries set by the mission may be so narrow as to threaten the firm's ability to adapt to change. Strict adherence to a narrow mission may prevent a company from taking advantage of new opportunities. At one time, Diebold's main source of revenue was bank vaults. But basing strategic decisions on a narrow mission statement -- to make the best bank vaults in the world -- would have prevented the company from entering the growing ATM smart card business.
At the other extreme, a vague mission statement certainly cannot provide boundaries. It is also hard to believe that the management of any firm would let a mission statement stand in the way of entering a new industry or business. Suppose Gillette had had a mission statement that limited its business to razor blades. Might that have stopped it from buying Duracell, a battery manufacturer?
3. To aid in making day-to-day decisions:
Middle-level managers are typically governed by operating objectives that are based on the strategic plans of top management Likewise, lower-level managers and first-line workers receive their marching orders from directives handed down from above. Thus, a worker in a fast food restaurant does not need a mission statement to know that his job is to stand there and flip the burgers when the buzzer sounds. Rather, it is directives, policies, and operating procedures (as well as the reward system) that typically determine employees' behavior.
The goals and objectives, and the procedures that logically follow from them, are generally better guides for decision making than the mission statement.
Would a firm really want employees to make decisions unilaterally based on their interpretation of how the mission statement would apply in a given situation? One could argue that the presence of a mission statement may in fact be counterproductive precisely because it might encourage employees to act independently. A mission statement such as "providing excellent customer service" offers a blank check for almost any pro-customer action -- lowering the price, increasing promotional allowances, providing special handling, and so on. Likewise, decisions based on a mission such as "putting the customer first" could likely backfire. Asking a lower-level employee to determine exactly what is meant by this and expecting him to behave in a way that is truly consistent with it may be asking too much.
4. To inspire and motivate employees:
Advocates argue that if all employees are properly sold on the firm's mission, take it seriously, and see how their jobs fit into the bigger picture, they will respond positively. Nonetheless, it seems unrealistic to expect that short, one-paragraph mission statements can actually motivate employees. In fact, employees may question the competence of upper management if the mission is perceived as conflicting with existing strategies, resources, and operating systems. Employees may question the integrity and competence of management for developing a mission seen as out of touch with reality. This is especially true if the mission emphasizes how much the firm values employees. Employees can react with confusion, anger, or disgust when they compare the statement to actual incidents, such as a postponed profit sharing plan or a slashed sales training budget. Another reason mission statements may be demotivating is that they may serve as a reminder to employees of how few resources they have been given to accomplish the mission.
Highly publicized mission statements also set customer expectations, which, if not met, can hurt sales and employee morale. When the company's promotional materials are plastered with "Our mission is to meet or exceed customer expectations," the stage is set for customer dissatisfaction, because it is unlikely that such a lofty goal will always be met.
Mission Statements as a Communication Tool
Peter and Donnelly (1998) contend that mission statements remain the "most widely used management tool in business today," They add that "it is not uncommon for an organization to spend one or two years developing a useful mission statement."
We believe the purpose of a mission statement should be to communicate a description of the firm that allows current and prospective employees, suppliers, investors, and customers to determine whether they want to be involved with it. The statement should be nothing more than a communication device that realistically reflects what the current managers, directors, and owners believe the firm is, and where it is likely to be headed.
The large insurance company GEICO has the following mission statement: "To market quality personal insurance services at a price and service advantage through direct response mechanisms and, where appropriate, through general field representatives." Gerber's mission statement says, "The people and resources of the Gerber Products Company are dedicated to assuring that the company is the world leader in, and an advocate for, infant nutrition, care, and development." Kellogg's is as follows: "Kellogg is a global company committed to building long-term growth in volume and profit and to enhancing its worldwide leadership position by providing nutritious food products of superior value."
Based on a realistic SWOT analysis, mission statements such as these enable current and potential employees, managers, suppliers, customers, and investors to self-select into the firm (to determine whether they want to get involved with it). Ultimately, if stakeholders are able to align their individual objectives with those of the firm, the result would more likely be an intrinsically motivated stakeholder group.
Even though we view a mission statement solely as a communication tool, it still must be crafted with care. Too narrow, it will attract only those that fit the present organizational form, perhaps creating a rigid structure unable to adapt. Too broad, it will attract stakeholders without clear goals of their own, leaving the firm either floundering without specific direction at all levels, moving in too many different directions at once, or creating factions that disagree with each other and the interpretation of the mission statement.
The best mission statements simply define the company's business and suggest a future goal.
References
Blake E. Ashforth and Barrie W. Gibbs, "The Double-Edge of
Organizational Legitimation," Organization Science, 1, 2 (1990):
177-194.
C.K. Bart, "Sex, Lies, and Mission Statements," Business Horizons,
November-December 1997, pp. 9-18.
D.J. Dalrymple and L.J. Parsons, Marketing Management: Text and Cases,
6th ed. (New York: John Wiley & Sons, 1995).
Stuart Davies and Keith Glaister, "Business School Mission
Statements--The Bland Leading the Bland?" Long Range Planning, August
1997, pp. 594-604.
Gregory Dess and Alex Miller, Strategic Management, 3rd ed. (Boston:
Irwin/McGraw-Hill, 1998).
R. Duane Ireland and Michael A. Hitt, "Mission Statements: Importance,
Challenge, and Recommendations for Development," Business Horizons,
May-June 1992, pp. 34-42.
Patricia Jones and Larry Kahaner, Say It and Live It: 50 Corporate
Mission Statements That Hit the Mark (New York: Currency-Doubleday,
1995).
James Krohe, Jr., "Do You Really Need a Mission Statement?" Across the
Board, July-August 1995, pp. 16-22.
Lance Leuthesser and Chiranjeev Kohli, "Corporate Identity: The Role of
Mission Statements" Business Horizons, May-June 1997, pp. 59-66.
James R. Lucas, "Anatomy of a Vision Statement," Management Review,
February 1998, pp. 22-27.
J. Paul Peter and James H. Donnelly, Jr., Marketing Management, 5th ed.
(Boston: Irwin/McGraw-Hill, 1998).
B. Schneider, "The People Make the Place," Personnel Psychology, Autumn
1987, pp. 437-453.
~~~~~~~~
By Barbara Bartkus; Myron Glassman and R. Bruce McAfee
Barbara Bartkus is an assistant professor of management, Myron Glassman
is a professor of marketing, and R. Bruce McAfee is a professor of
management, all at Old Dominion University in Norfolk, Virginia.
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Source: Business Horizons, Nov/Dec2000, Vol. 43 Issue 6, p23, 6p
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...nine of every ten of the 500 firms surveyed had used a mission statement...
...the aim of mission statements is to publicly declare the purpose, goals, products, markets, and philosophical views of the organization...
To communicate a sense of the firm's direction and purpose...
To serve as a control mechanism to keep the firm "on track."
To help in making a wide range of day-today decisions.
To inspire and motivate employees.
In developing a mission, the traditional method has been to use SWOT analysis, which involves examining a firm's strengths, weaknesses, opportunities, and threats...
The question is, does communicating yet one more statement of purpose -- and a very general one at that -- contribute any further important information...
By publicizing its direction and purpose, a company may be providing competitors with information they can use to their advantage.
...the boundaries set by the mission may be so narrow as to threaten the firm's ability to adapt to change...
...a vague mission statement certainly cannot provide boundaries...
...a worker in a fast food restaurant does not need a mission statement to know that his job is to stand there and flip the burgers when the buzzer sounds...
...it is directives, policies, and operating procedures (as well as the reward system) that typically determine employees' behavior...
The goals and objectives, and the procedures that logically follow from them, are generally better guides for decision making than the mission statement.
...a mission statement may in fact be counterproductive precisely because it might encourage employees to act independently...
...it seems unrealistic to expect that short, one-paragraph mission statements can actually motivate employees...
the purpose of a mission statement should be to communicate a description of the firm that allows current and prospective employees, suppliers, investors, and customers to determine whether they want to be involved with it...
Based on a realistic SWOT analysis, mission statements... enable current and potential employees, managers, suppliers, customers, and investors to self-select into the firm (to determine whether they want to get involved with it).