Mission Statement Impact on Financial Performance
Over the years, researchers have attempted to tie the presence and quality of vision and mission statements (VMS) to an organization’s success, particularly its financial performance. The research has focused mainly on mission statements, because they are more specific and detailed, thereby providing more “meat” to study.
Researchers have found it difficult to link mission statements directly to financial performance because there are so many other factors involved. For this reason, Bart, Bondis and Taggar built a model,1 simply called the PLS Model (see inset diagram), to illustrate how the effects of a mission statement can ripple through an organization, and ultimately impact financial performance.
The model begins at the development stage, where mission rationale and mission statement content are closely linked. For many organizations, their rationale for developing a mission statement is to build unity and establish common goals for all members of the organization. When it comes to the content stage, however, some managers decide to set vague mission goals like “outstanding customer service,” hoping to empower lower-level employees. These managers want employees take ownership of the mission statement by letting their employees decide how to accomplish the goals set by management.
Bart, Bondis and Taggar’s findings suggest that organizations may see better results from focusing on a mission statement’s “means” rather than its “ends.” Mission statements that focus on how to achieve goals are more strongly associated with positive financial performance than those that focus solely on the end goal.2
Bart, Bondis and Taggar’s model also outlines some of the other factors, called “intermediate outcomes,” which strengthen or lessen a mission statement’s impact on financial performance. These include:
- alignment with other organizational realities
- employee satisfaction with the mission
- the mission’s influence on employee behaviour
- employee and management commitment to organizational objectives3
The model stresses the fact that it’s ultimately member behaviour that directly impacts financial performance. It’s up to the organization’s leaders to increase the possibility that the mission statement will affect employee behaviour. Read Developing Vision and Mission Statements that Inspire Action to find out more.
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