Are Corporate Mission Statements a Waste of Space?
Business Voice, February 2004
Ask most employees about their company’s mission statement and you draw a blank. Most haven’t a clue. Ask others and they will say ‘isn’t it something to do with being the best, world leader or something like that?’ In other words, for most they are regarded as pretty irrelevant for corporate performance. From the top to the bottom, no-one takes them seriously. In many companies they are the manufactured products of PR consultancies. We all have them because that is what companies are supposed to have these days. The outcome is cynicism through to downright mockery. In other words, they merely reinforce the sarcastic attitudes that I said in my column last month were rife throughout UK business.
But it doesn’t have to be like that. A well worked-out mission statement can energise the corporate culture. It can be inspirational and generate high levels of employee commitment and enthusiasm. These are vital ingredients of any business that aspires to be innovative in an ever changing global marketplace. Mission statements should define what companies stand for. They should embody the corporate brand. A good example of this is BP. It has a mission statement that reaffirms its commitment to environmental sustainability. This brands the company both internally as well as in the wider marketplace. Young people are attracted to work for BP because of this explicit commitment. 3M’s focus on innovation, despite its highly diverse product range fulfils an important function of corporate integration. Cobra Beer has the mission statement to ‘aspire and achieve against all the odds’ which gives a clear signal that it is very much an entrepreneurial business.
Corporate mission statements are important for employee motivation. Properly thought through, they express a company’s aspirations. Employees know what their businesses want to become. This is important for all of us in our every day lives. We need personal goals to motivate us to get out of bed in the morning. We want to know what we hope to achieve during the course of the day. On this basis we plan and develop our personal strategies.
So it is in soccer teams. The job of the team coach is to define the mission (to win the game) and to develop the necessary strategies and tactics for this to be achieved. It is exactly the same in the business world. Employees, as members of the corporate team, need to understand what the company stands for and what it hopes to achieve. It is then the responsibility of line managers to consult and to discuss with them tactics and strategies.
To be successful as motivational tools, corporate mission statements have to be converted into relevant operational objectives. They have to be interpreted in different ways for different parts of the business. The sales, marketing and manufacturing functions have to convert the corporate mission statement into their own different operational objectives.
I have just completed a consultancy project with Parker Steel, a fast growing stockholding and fabrication company in the south of England. We worked to a number of precisely-defined steps. First, the senior managers prepared a realistic mission statement: ‘To exceed customer expectations through a flexible and reliable service delivery of state of the art technology, products and services for the long-term sustainable growth and profitability of the business’. Everybody in the business now knows what the company wants to do. But this is only because this statement was converted into six key success factors that spell out key targets for shareholders, customers, employees and suppliers. The next step was the preparation of detailed action plans for each of the company’s separate business units. The final step was the implementation of a performance-related reward system geared to the achievement of these targets.
Everyone in the business now knows what they are supposed to achieve and how their performance is measured. The mission statement acts as the rudder of the corporate boat, providing the direction and the focus for decision-making throughout the management process. It also acts as the glue that holds the whole business together. But most importantly, it has raised the level of management morale and through this, the cross-fertilization of ideas for innovation, product development and business growth. Everyone is pulling together in pursuit of the common purpose. They are acting in the same way as English rugby team in the World Cup.
It is easier to galvanise the motivation of managers through mission statements in medium and small size businesses than in larger corporate conglomerates. Equally, mission statements can be more effective as management tools in companies with focused product and service portfolios. In fact the two things come together. This is why there has been a shift away from the highly diversified business model. Companies operating in this way usually lack the focus to compete against the leaner, smarter players in the marketplace.
But we should not forget the first companies to have corporate mission statements were the highly successful and diversified Japanese companies of forty years ago. Their purpose was to inspire and to motivate staff on the assumption that financial rewards are not enough to get the best out of people. In other words, employees need a higher purpose to give meaning to their work. Major multi-nationals like Proctor and Gamble attach great importance to their mission statements to give their employees around the world a sense of corporate engagement and purpose. These businesses, operating in diverse cultural settings, use their corporate mission statements as vital planks in building and maintaining their transnational corporate cultures.
In business, employees want to know what their companies stand for and what they want to achieve. This is the purpose of corporate mission statements. If in many businesses these are treated as a bit of a joke, it is the result of bad management. They are only effective as motivational and inspirational tools if they are converted into key success factors and performance objectives and directly linked to personal responsibilities and reward systems. In other words, it is the model of the England rugby team and the vital role of the coach.
© Professor Richard Scase