Missions A mission is: The ‘fundamental objective(s) of an entity expressed in general terms’. (CIMA Official Terminology) The mission therefore is the basic purpose of the organisation and tries to identify the reason it exists. Ultimately the strategies of the organisation should be designed to support the accomplishment of this mission. It is important that the organisation is able to communicate its mission both internally and externally, which requires the creation of a mission statement. ‘The mission says why you do what you do, not the means by which you do it.’ Mission statements Peter Drucker A mission statement is: A ‘published statement, apparently of the entity’s fundamental objective(s). This may or may not summarise the true mission of the entity’. (CIMA Official Terminology) 32 Chapter 2 Essentially, the mission statement is a statement in writing that outlines the organisation’s mission and summarises the reasoning and values that underpin its operations. There is no ‘correct’ format for the mission statement and it will vary in style and length for each organisation. However, typically it is a short, punchy (and hopefully memorable) explanation of the reason the organisation exists.
Mission statements will therefore typically have some or all of the following characteristics: • usually a brief statement of no more than a page in length (often much shorter) • very general statement of entity culture • states the aims (or purposes) of the organisation • states the business areas in which the organisation intends to operate • open-ended (not stated in quantifiable terms) • does not include commercial terms, such as profit • not time-assigned • forms a basis of communication to the people inside the organisation and to people outside the organisation • used to formulate goal statements, objectives and short-term targets • guides the direction of the entity’s strategy and as such is part of management information. Mission statements fulfil a number of purposes: • to communicate to all the stakeholder groups – everyone involved in the organisation will be made aware of its mission and should therefore know what to expect from the organisation. • to help develop a desired corporate culture – by communicating core values, policies and expected standards of behaviour to key groups, such as employees. • to assist in strategic planning – the organisation should ensure that its strategies are consistent with its overall mission and therefore its corporate values. The mission statement can also be used as a way of screening out potentially unsuitable strategies. However there are a number of criticisms of mission statements, including: • they may not represent the actual values of the organisation – as evidenced by the official CIMA definition of a mission statement. • they are often vague – mission statements tend to be stated in very general terms, using phrases that are difficult to measure (such as Coca Cola’s desire to ‘refresh the world’). • they are often ignored – mission statements are often seen as a public relations exercise and are not used by employees or managers when developing strategies. • they may become quickly outdated – especially in fast-moving industries. 34 Chapter 2 The process of creating a mission statement The process of writing a mission statement Mission statements are normally drafted by the senior managers or directors of the organisation, as they are uniquely positioned to understand the needs and aims of the business at a high level. Usually the first step in creating a mission statement is to analyse the stakeholders of the organisation – customers, shareholders and employees (amongst others). More detail on this stage can be found later in this chapter. The directors of the company should identify the needs and aims of these stakeholders. They can then attempt to create a mission statement that reflects these aims and that shows how the organisation wants to relate to the stakeholders. A draft mission statement can then be written and distributed to key stakeholders for review. Any feedback can be built into the final mission statement, which can then be published and widely distributed to as many interested parties as possible. The life span of a mission statement There are no set rules on how long a mission statement will be appropriate for an organisation. It should be reviewed periodically to ensure it still reflects the company’s environment. If the market or key stakeholders have changed since the mission statement was written, then it may no longer be appropriate.
Vision statements (5 minutes) Vision statements are often confused with mission statements, but the two are subtly different. While a mission statement defines the present purpose and state of an organisation, the vision statement identifies the ideal position that the company wants to reach within the medium to long-term. It is, essentially, the longer term aspirations of the organisation.
Vision statements help give a longer term direction to the organisation’s strategies and are designed to help staff make decisions and behave in a way that helps move the company towards its ideal long-term position. Unfortunately, they have many of the same drawbacks as mission statements. Illustration 4 – mission or vision? The main difference between vision and mission is illustrated by the statements produced by Microsoft: Mission statement: To help people and businesses throughout the world realise their full potential. Vision statement: A personal computer in every home running Microsoft software. This shows that the mission statement focuses on the company’s present operations. The vision shows the ideal state that the company wishes to achieve in the future. 3 Values The values of the organisation describe the core ethics or principles which the organisation will abide by, no matter what circumstances it might find itself in. The values will help drive the behaviour of the business, and guide the actions of management, employees and other stakeholders, such as suppliers. Appropriate values that are clearly stated and adhered to serve a number of purposes for the organisation: • to guide staff behaviour – everyone involved in the organisation will be expected to share and exhibit its values, resulting in suitable strategic and operational decisions being made. Generating strategic options: Mission, vision, values and stakeholders • to demonstrate integrity and accountability to external stakeholders – by stating a commitment to set levels of behaviour, failing to adhere will naturally result in steps being taken against the business. • set the organisation apart from its competitors – a proven adherence to stated values can be a source of competitive advantage should competitors fail to display the same expected standards of behaviour. • Reduce the risk of inappropriate behaviour from staff – particularly if the consequences of failing to act in an expected manner are made widely known. • Set the culture of the organisation. The values set out by the organisation will depend on its industry and circumstances. For example, an academic institution such as a university (and therefore not a business driven by profit) may well place great value on freedom of thought, the value of research, or intellectual rigour. On the other hand, a listed telecoms company may adopt values such as network reliability, customer service, and returns to shareholders.
Objectives A mission is an open-ended statement of the firm's purpose and strategy. Objectives are more specific and seek to translate the mission into a series of mileposts for the organisation to follow. To be useful for motivation, evaluation and control purposes, objectives should be SMART: • Specific – clear statement, easy to understand • Measurable – to enable control and communication down the organisation • Attainable – it is pointless setting unachievable objectives • Relevant – appropriate to the mission and stakeholders • Timed – have a time period for achievement. Key issues In the same way that an organisation's overall strategic plans need to be translated into a hierarchy of lower level tactical and operational plans, there will be a hierarchy of objectives where the mission statement is translated into detailed strategic, tactical and operational objectives and targets. Typical issues this gives rise to are as follows: • Objectives drive action, so it is important that goal congruence is achieved and the agreed objectives do drive the desired strategy. • It can be difficult (although necessary) to prioritise multiple, often conflicting objectives. • This is made more complex when some objectives are hard to quantify (e.g. environmental impact). • There will be a mixture of financial and non-financial objectives. • There is always the danger of short-termism. • Objectives will vary across stakeholder groups and a strategy may satisfy some groups but not others. 39 Generating strategic options: Mission, vision, values and stakeholders Primary and secondary objectives Organisations will typically set themselves different types of objective, with some being more important than others. Primary objectives (also known as corporate objectives) are the major, overriding objectives of the organisation. They can be financial or non financial but relate to the organisation as a whole and, typically, the needs of its stakeholders. Secondary objectives directly relate to the various strategies that the organisation needs to adopt in order to meet its primary objective. For instance, a company may set itself a primary objective of growing returns for its shareholders. It will then need to implement a number of strategies to help it achieve this – each strategy having its own ‘secondary’ objective. These secondary objectives cou...
