Mission statements are more valuable than you might think


The words you use in a mission statement affect whether or not your company will make ethical decisions.

If you think of mission statements as just a few sentences on your website, you could be shooting yourself in the foot. Various pieces of research suggest the phrasing of mission statements correlates with both financial performance and the likelihood of your organisation making unethical decisions.

Many organisations feel as though their mission statements don’t align with the reality of their businesses. So, if you’re thinking of giving yours a refresh, this research might help you to find the right words.

Speedy words = risky choices

When we’re rushing, we’re opening ourselves up to poor decision-making. You’ve only got to consider the usually sensible people who run a red light when late for an appointment.

New research suggests that even the presence of ‘locomotion terms’ – that is, language that aligns with the tendency to ‘act now, think later’, like ‘speed’, ‘dare’ and ‘momentum’ – in a company’s mission statement can lead to unethical behaviour down the line.

The researchers from the London Business School, Columbia University and Stockholm School of Economics found that mission statements that contained more locomotion terms than what they call ‘assessment terms’ – words such as ‘assess’, ‘ponder’, ‘review’ and ‘consider’ – are often linked with a locomotive culture, such as the ‘fail fast’ mantra of many start-ups.

The researchers tested their hypothesis by measuring both locomotive and assessment terms of 559 US franchises’ (think Dunkin’ Doughnuts or Papa John’s)’ mission statements. Some had been served  discrimination violations from the Equal Employment Opportunity Commission (EEOC) and others had be lauded for their ethical practices. The researchers combed through each franchises’ mission statements using a linguistic processing program to determine which end of the scale each statement sat on.

In an article they wrote for The Harvard Business Review, the researchers offered the following example of a mission statement laden with locomotive terms:

“Our reputation for fast responses, unparalleled quality, and uninhibited commitment has contributed to our growth as a company.”

And one that focused on assessment terms:

“Our company is consultative, collaborating with you closely from imagination through to installation, to attain the high quality you seek while adhering to your timeframe and budget.”

They found that locomotive language in mission statements was often indicative of EEOC violations. This held true across a variety of industries.

“Interestingly, there were non-violating franchises with mission statements containing the same amount of both types of terms, which suggests that locomotion and assessment can act as countervailing forces to limit an organisation’s discrimination exposure,” wrote the researchers.

This assessment checks for correlation not causation. It’s possible it’s not the mission statement itself that is making staff behave unethically, it’s that the type of organisation with a problematic mission statement is also likely to foster unethical behaviour.

That’s why the researchers  conducted a further experiment. Participants were shown mission statements with a high level of locomotion terms and then asked a series of questions designed to determine if they’d make decisions in direct breach of the EEOC regulations – such as if they’d fire an employee with a disability. Fascinatingly, they found that locomotive mission statements would increase the chances of participants making an unethical decision by four times.

The researchers conclude that, “Locomotion motivates action, but locomotion combined with assessment motivates conscientious action.”

The elements of financial success

The above is all about language to steer your organisation towards ethical decision making, but do mission statements have an effect on an organisation’s finances?

Research from the 2006 European Management Journal suggests that there is some correlation (not causation), even if just in a very small way.

Academics from Old Dominion University in Virginia found that mission statements that include three very specific elements can be linked with increased financial performance.

These three elements include:

  1. Mentioning specific stakeholders only – Statements that listed the only stakeholders as ‘employees’ and ‘society’ had a positive relationship with financial success. Too many stakeholders in a mission statement was found to have no financial benefit.
  2. Forefronting values/philosophy – including other components, like financial objectives or future visions, was shown to remove the positive relationship with higher financial performance.
  3. Including ‘making non-routine decisions’ as a company goal also had a positive relationship. Meaning, making it public knowledge to staff should be creative with their problem-solving.

As the authors write in their study, “Although it is difficult to determine cause and effect, it is possible that such a statement [one that cites society as a stakeholder] does lead to more socially responsible actions and a more favourable reputation. This, in turn, makes the firm more attractive to potential customers, employees, etc., which leads to improved financial performance. On the other hand, [it’s possible] the more successful firms have the resources to be more responsible to society.”

Regarding the second point, the authors found much more tenuous links between mentioning company values and financial performance. They speculate that sharing organisational values to the public could attract ethically minded employees who go on to encourage ethical decision-making. 

A finding that initially surprised the researchers was that motivational phrases did not correlate with increased financial performance. However, on further inspection, they realised that motivational phrasing doesn’t necessarily align with how employees are actually incentivised (with bonuses and rewards, for example).

The third point is perhaps the most interesting. While most mission statement objectives might focus on providing direction or, as above, motivational phrasing, the objective that was most linked with positive financial outcomes was being careful to highlight non-routine decision making. 

The researchers suggest this could encourage delegation and the development of capabilities within an organisation, which drives performance, and that successful organisations “encourage employees to rely on value-driven guidelines rather than purely objective criteria for decisions.”

The researchers are the first to admit that many other factors will come into play when determining the effectiveness of a company’s mission statement. But they point to another study which offers fascinating, simple advice that you could take on board: the success of a mission statement should centre around focusing on what the business should be rather than what the business already is.


Communication is key. Ignition Training’s in-house training course Communicating Effectively can help to identify communication barriers and provide strategies to overcome them.


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Max Underhill
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Max Underhill

The development of the corporate statements is a logical structured process. I would have thought that an organisation need firstly to understand their core business (now and in the future), then who are the key stakeholders and what are these stakeholder expectations and how will we know they are being delivered (performance measures). The organisation is now in a position to express the core business/purpose as a Vision statement (maybe a current and future) that is understood by staff, customers etc. If this was developed at a strategic planning session this would be almost the end. The Mission is how… Read more »

Nicola
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Nicola

Hi there
I notice that the “another study” brings up an error when I click on it. Is there any way you can put the link here for me?
Thanks so much

More on HRM

Mission statements are more valuable than you might think


The words you use in a mission statement affect whether or not your company will make ethical decisions.

If you think of mission statements as just a few sentences on your website, you could be shooting yourself in the foot. Various pieces of research suggest the phrasing of mission statements correlates with both financial performance and the likelihood of your organisation making unethical decisions.

Many organisations feel as though their mission statements don’t align with the reality of their businesses. So, if you’re thinking of giving yours a refresh, this research might help you to find the right words.

Speedy words = risky choices

When we’re rushing, we’re opening ourselves up to poor decision-making. You’ve only got to consider the usually sensible people who run a red light when late for an appointment.

New research suggests that even the presence of ‘locomotion terms’ – that is, language that aligns with the tendency to ‘act now, think later’, like ‘speed’, ‘dare’ and ‘momentum’ – in a company’s mission statement can lead to unethical behaviour down the line.

The researchers from the London Business School, Columbia University and Stockholm School of Economics found that mission statements that contained more locomotion terms than what they call ‘assessment terms’ – words such as ‘assess’, ‘ponder’, ‘review’ and ‘consider’ – are often linked with a locomotive culture, such as the ‘fail fast’ mantra of many start-ups.

The researchers tested their hypothesis by measuring both locomotive and assessment terms of 559 US franchises’ (think Dunkin’ Doughnuts or Papa John’s)’ mission statements. Some had been served  discrimination violations from the Equal Employment Opportunity Commission (EEOC) and others had be lauded for their ethical practices. The researchers combed through each franchises’ mission statements using a linguistic processing program to determine which end of the scale each statement sat on.

In an article they wrote for The Harvard Business Review, the researchers offered the following example of a mission statement laden with locomotive terms:

“Our reputation for fast responses, unparalleled quality, and uninhibited commitment has contributed to our growth as a company.”

And one that focused on assessment terms:

“Our company is consultative, collaborating with you closely from imagination through to installation, to attain the high quality you seek while adhering to your timeframe and budget.”

They found that locomotive language in mission statements was often indicative of EEOC violations. This held true across a variety of industries.

“Interestingly, there were non-violating franchises with mission statements containing the same amount of both types of terms, which suggests that locomotion and assessment can act as countervailing forces to limit an organisation’s discrimination exposure,” wrote the researchers.

This assessment checks for correlation not causation. It’s possible it’s not the mission statement itself that is making staff behave unethically, it’s that the type of organisation with a problematic mission statement is also likely to foster unethical behaviour.

That’s why the researchers  conducted a further experiment. Participants were shown mission statements with a high level of locomotion terms and then asked a series of questions designed to determine if they’d make decisions in direct breach of the EEOC regulations – such as if they’d fire an employee with a disability. Fascinatingly, they found that locomotive mission statements would increase the chances of participants making an unethical decision by four times.

The researchers conclude that, “Locomotion motivates action, but locomotion combined with assessment motivates conscientious action.”

The elements of financial success

The above is all about language to steer your organisation towards ethical decision making, but do mission statements have an effect on an organisation’s finances?

Research from the 2006 European Management Journal suggests that there is some correlation (not causation), even if just in a very small way.

Academics from Old Dominion University in Virginia found that mission statements that include three very specific elements can be linked with increased financial performance.

These three elements include:

  1. Mentioning specific stakeholders only – Statements that listed the only stakeholders as ‘employees’ and ‘society’ had a positive relationship with financial success. Too many stakeholders in a mission statement was found to have no financial benefit.
  2. Forefronting values/philosophy – including other components, like financial objectives or future visions, was shown to remove the positive relationship with higher financial performance.
  3. Including ‘making non-routine decisions’ as a company goal also had a positive relationship. Meaning, making it public knowledge to staff should be creative with their problem-solving.

As the authors write in their study, “Although it is difficult to determine cause and effect, it is possible that such a statement [one that cites society as a stakeholder] does lead to more socially responsible actions and a more favourable reputation. This, in turn, makes the firm more attractive to potential customers, employees, etc., which leads to improved financial performance. On the other hand, [it’s possible] the more successful firms have the resources to be more responsible to society.”

Regarding the second point, the authors found much more tenuous links between mentioning company values and financial performance. They speculate that sharing organisational values to the public could attract ethically minded employees who go on to encourage ethical decision-making. 

A finding that initially surprised the researchers was that motivational phrases did not correlate with increased financial performance. However, on further inspection, they realised that motivational phrasing doesn’t necessarily align with how employees are actually incentivised (with bonuses and rewards, for example).

The third point is perhaps the most interesting. While most mission statement objectives might focus on providing direction or, as above, motivational phrasing, the objective that was most linked with positive financial outcomes was being careful to highlight non-routine decision making. 

The researchers suggest this could encourage delegation and the development of capabilities within an organisation, which drives performance, and that successful organisations “encourage employees to rely on value-driven guidelines rather than purely objective criteria for decisions.”

The researchers are the first to admit that many other factors will come into play when determining the effectiveness of a company’s mission statement. But they point to another study which offers fascinating, simple advice that you could take on board: the success of a mission statement should centre around focusing on what the business should be rather than what the business already is.


Communication is key. Ignition Training’s in-house training course Communicating Effectively can help to identify communication barriers and provide strategies to overcome them.


2
Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
Max Underhill
Guest
Max Underhill

The development of the corporate statements is a logical structured process. I would have thought that an organisation need firstly to understand their core business (now and in the future), then who are the key stakeholders and what are these stakeholder expectations and how will we know they are being delivered (performance measures). The organisation is now in a position to express the core business/purpose as a Vision statement (maybe a current and future) that is understood by staff, customers etc. If this was developed at a strategic planning session this would be almost the end. The Mission is how… Read more »

Nicola
Guest
Nicola

Hi there
I notice that the “another study” brings up an error when I click on it. Is there any way you can put the link here for me?
Thanks so much

More on HRM