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The formulation of a vision and mission statements is extremely important to run a business. These statements are used to clear up the organization's way. The vision inspires, motivate staff and represent a business by articulating a common vision of the future, whereas, a mission is a snapshot of what the business is today. They have lots of benefits to organizations as well as employees. This paper will discuss these statements in details.
I - INTRODUCTION
Vision statements and Mission statements are extremely important in every business. These statements are chosen clearly by successful leaders to convey the direction of a company or an organization. A company choosing a clear mission and vision, can communicate its intentions powerfully and motivate its team to realize an inspiring common vision of the futures. The mission statement shows the organization's purpose and objectives whereas the vision statement defines the purpose as well, but in terms of the company's values instead of bottom line measures. Concerning the employees of the organization, this vision gives directions about how to behave and it inspires them to do and to give their best. Finally, this statement gives a shape to the customers' understanding of why they can work with the company. This paper will focus on the benefits and challenges of formulating those statements.
II - FINDINGS
1- Vision, Mission Statements and Company Value.
According to Ireland& Duane & Mickael (1992), vision statement can beÂ defined asÂ what an organization's business will do in the future and why it will exist. In addition, it has defined purposes and goals to be achieved by a set date. This statement takes into consideration the status of the organization, as well as serves to point the plans or direction of where the company wishes to go. Moreover, a company's vision statement is a business development tool and marketing tool because it shows its goals and purpose to its staff, employees, suppliers, customers, and the media ( Ireland & Duane. R & Mickael. A, 1992)
This statement is sometimes called a company's picture in the future but it might be more than that. An organization's vision statement is its inspiration, the framework for its plans of the future. This statement may be applied to an entire company or to one division of that company. Thus, the vision statement answers the question , "Where does a company want to go?" ( Ireland & Duane. R & Mickael. A, 1992)
According to Ireland & Duane& Mickael, a mission statement can be defined as a short written statement of a business philosophies and goals. In other word, it is the fundamental purpose of a brief description of a company. A mission statement answers the question , "Why does a company exist?" ( Ireland & Duane. R & Mickael. A, 1992)
This statement should identify the products and service, define who a company's customers are, and describe the geographical location in which the company operates. In addition, it articulates the company's goal for the organization and the public.
the mission statement of Canadian Tire reads:
It is a growing network of interrelated businesses and continuously attempts to meet the needs of its customers by offering unique package of service, location and price. The second example of a mission statement is Rivercorp, this business development is "To provide one stop progressive economic development services through partnerships on behalf of shareholders and the community" ( Ireland & Duane. R & Mickael. A, 1992).
As can be seen in these two mission statements, mission statements are as varied as the organization. However, all mission statements may "broadly describe an organization's present capabilities, customer focus, activities, and business makeup" ( Ireland & Duane. R & Mickael. A, 1992).
Overall, "if you do not set your goals based upon your Mission Statement, you may be climbing the ladder of success only to realize, when you get to the top, you are on the wrong building". ( Ireland & Duane. R & Mickael. A, 1992)
The majority of entrepreneurs do not carry out valuation on their companies in order to learn their market worth; they believe that the determined value is not pertinent to their operation or very difficult to calculate. Others think that they do not know where to look to find help. But, valuation helps any succession plan and any response to an unexpected buyout or merger offer and any changes in shareholders positions. What to put you at an advantage is knowing the value of your company before any of these events happen. ( Ireland & Duane. R & Mickael. A, 1992)
1.4-HSBC as an example
a) HSBC's Vision:
According to a member of HSBC, which is a big organization that has millions of customers all over the world since 1865, "To take place among Turkey's most powerful, most profitable, most admired leader banks" (HSBC official website, 2010).
b) HSBC's Mission:
According to HSBC website, its mission is "to meet its customers financial needs in the fastest and most appropriate way, to continue innovative works in order to achieve: human resource with superior qualities, technological infrastructure and service packages".(HSBC official website,2010)
c) HSBC's Values:
According to the official website of HSBC, the bank's values are:
Increasing service quality in order to satisfy their customer all over the world.
To be a "pioneer in the implementation of technologies those create distinction for its customers, employees and shareholders" ( HSBC official website,2010)
Keeping its reliability at the greatest level with contributing its powerful capital structure and liquid assets.
Making a positive contribution to the whole community.
To improve knowledge, to hire processes and skills of the employees, finally, to take into account the creation of the most preferred work environment I order to respect meritocracy. ( HSBC official website,2010)
2- Benefits of Mission and vision Statements:
According to Wickman,1997 "not creating a mission is a huge mistake".Â To illustrate this point, developing a clear mission statement early in an organization's development is critical.Â There are many reasons for this:
First, creating a mission statement is largely beneficial to the founders."As it is difficult to write less than more, boiling your company's over-arching goal down to one sentence is a daunting and nuanced task and the exercise of doing so should help the founders get on the same page" ( Wickman.P.A, 1997 )
Second, defining a mission would help managers determine whether the scope of their effort is large or very small and can not capture the real opportunity of the market.
Third, if a company finds that its mission statement is to create a better version of a goal that is already being done, "this company may not be differentiated enough to make it through the throws of being the small player going head to head with incumbents". ( Wickman.P.A, 1997 )
Creating a mission statement is a process which can define and also clarify the company's team objectives. By "giving the team a polestar around which they can build their entire strategies" ( Wickman.P.A, 1997 ).
3- EMPLOYEE INVOLVEMENT
It is sometimes helpful to allow organization-wide input to create a mission statement. This approach might "result in a better understanding of the organization and a greater commitment to that company. Employees throughout the company can help in identifying the core value of the organization" ( Wickman.P.A, 1997 ). Many companies create competitions inviting their employees to submit suggestions in order to encourage employee participation. Companies sometime "provide cash prizes as an incentive for inspirational and creative statement" ( Wickman.P.A, 1997 ). Some organizations find it very useful to invite their customers to assist writing the mission statement because of providing an honest perspective. Another option is about reviewing mission statement from other organizations. As the writing process begins, this could help providing ideas. ( Wickman.P.A, 1997 )
A mission statement has no meaning without the support of the employees in a company. Each employee should commit to its success as well as internalizes it. When the statement is completed, it is crucial that the company "should not put it on the shelf to collect dust" and to be forgotten. But, it should be shared with the whole company ( Wickman.P.A, 1997 ).
Companies should be ambitious and creative in order to make employees aware of their mission. and to place it in places where employees meet. This could remind them and make them aware of the goals and targets of the company. Showing videos that outline the details of the proposed new mission statement could be helpful and useful. However, employees may have many opportunities in order to discuss that statement with all members of management. By setting up meetings with the grass root employees and member of management can help uncover areas where the organization does not meet the standards that is set by a mission statement. It is really important to communicate the mission statement because it will make customers feel like having a great value and importance. That statement can be sent to customers by using mass mailing and posted on signs in places those customers frequent. It is setting up the goals and purposes of the company so customers realize what to expect when starting and doing business with the organization ( Wickman.P.A, 1997 )
Communication and formulation of mission and vision statement
Most companies develop their mission and vision statements from a set of tasks they are called on to carry out or to perform in the light of individuals, global or national priorities. For instance, let's consider some public sector organizations which are set up in India throughout the period of the fifties and sixties. The existence to the vision of Jawahirial Nehru, the first prime minister, who worked for the national purpose of building a powerful and reliant India to lay the foundations of basic infrastructure industries. Mission statement can be formulated in a formal or informal ways ( Kazmi.A, 2008)
An entrepreneur always has a perception of the type of company that he wants his business to be. His mission statement can be formulated on the basis of vision that he decides in the first stage of the company's growth. Strategies can also be contributed to the development of the mission statement. They do this in an informal way by leading a hand in the creation of some corporate identity. They can also do it in a formal way through discussion and writing the mission statement. Here are some examples that illustrate how companies formulated and communicated their mission statement:
Eicher Consultancy: it is an organization which was born in 1991, with a mission statement. It has decided to have a statement, which is ambitious, addressed directly to the well-being of the country.
HCL: In the beginning of 1991, the environment for computer producers became competitive. Managers assessed the internal strengths and designed what is called "customer-centric mission statement" for internal customer and team building.
Marico Industries: it designed its first mission statement in 1990. its goals were being a multiproduct and consumer- oriented company. It spent 7 months evolving common and shared purposes. "â€¦outlined the goals and aspirations after hectic consultations with senior management. A 3-day workshop of managers prepared a four-page mission statement". In 1995, they needed to rewrite the mission statement taking into account the changes circumstances. ( Kazmi.A, 2008)
Communicating the mission statement is as crucial as formulating it in a good way. There is a relationship between the number of methods that is used to communicate a mission statement and the company's performance. There are many tactics to help familiarity and recognitions of the mission statement such as:
High visibility: it should be posted on multiple areas and locations.
Annual reports and seminars.
Newsletter, advertisement and workshops. (Kazmi.A, 2008)
A mission and vision statements, when they are formulated and communicated, should be serving the company for many years. However, these statements might not become clear as the company grows and add new services and products, technologies and markets to its activities. Thus, mission statement should be re-examined and reconsidered to change and write a new and fresh statement to the company's mission (Kazmi.A, 2008).
As what have been discussed, a mission statement shows the fundamental purpose of a company. It also defines the critical purposes and the customer. Whereas, a vision statement concentrates on the future and provides inspiration. It is for all members of the organization and not for customers or clients. In my opinion, all businesses should have a mission and a vision statements in order to ensure that every member in the company is on the same way, so to speak, and to be served as a baseline for an effective business planning.
- Wickman,P.A. "Developing a mission for an entrepreneurial venture" Management Decision, 1997, P 373,381,382,386.
- Duane .R & Mickael.A, "Mission statements: importance, challenge, and recommendations for development", Business Horizons.1992 P 34,42,43,44
- Kazmi.Azhar, "Strategic management and business policy"
- HCBC official website [online] Available at: http://www.hsbc.com.tr/eng/about_HSBC/our_vision_and_values/ [ Accessed on 4th April 2010].