What is the importance of mission and value statement and their impact on an organization?
• Chapter 1 • Purpose, mission and values alignment starts with understanding the difference between these terms. When leaders understand the difference between purpose and mission, and how values can support either, they can leverage these elements effectively to move their organization in the optimal direction for success. • Chapter 2 • Purpose-Driven vs. Mission-DrivenPurpose and mission serve the same role for organizations but are achieved in different ways and have different impacts. Purpose and mission are an organization’s reason for being and guide decision-making. However, organizations cannot be both purpose-driven and mission-driven, even though a purpose and mission serve the same strategic role. Being a purpose-driven business is much different in practice than being a mission-driven one. Purpose-driven companies organize their business, processes and employees around impacting the greater good. A purpose is both timeless and often global in scope. Mission-driven companies also make a positive impact, but they’re doing so for a narrower set of stakeholders. Additionally, a company’s mission might change over time as the market shifts or business objectives change. A purpose, on the other hand, rarely — if ever — changes. It’s common for organizations to confuse these two terms, yet it’s essential to distinguish whether a company is purpose- or mission-driven. The specific examples below paint a clear picture of the differences between the two. Examples of purpose-driven companiesPurpose-driven companies are guided by purpose as a business model. They exist not solely to maximize profit or increase shareholder value but equally to make a lasting, beneficial impact on the world. Purpose-driven businesses measure success based on how significant an impact they have on the specific global issues they’re trying to influence. An example of a purpose-driven consumer brand is Tom’s Shoes. Tom’s impact webpage reads, “we’re in business to improve lives.” Tom’s doesn’t exist simply to sell shoes. It exists to “help humanity thrive” by helping people across the globe “feel physically safe, mentally healthy and have equal access to opportunity.” Tom’s lives out its company purpose by giving grants to organizations that support its efforts to improve lives. Tom’s partners with these organizations to provide numerous life-improving services, including sight-saving surgeries, free mental healthcare, education to children living in poverty and clean water to those who can’t access it. It gives these organizations $1 for every $3 the company earns and gives away shoes to communities that need them. Tom’s uses its profit from selling shoes to support its purpose of improving lives. Tom’s Shoes embeds its purpose into its business, processes and culture. The company is actively working to increase its sustainability efforts by incorporating more sustainable materials into its products and shipping materials. One way Tom’s keeps its employees and culture aligned to its business purpose is by funding “Giving Trips.” Giving Trips are “a fully funded opportunity [for employees and shareholders] to travel to another country or state, and learn alongside [its] Giving Partners.” Tom’s says these trips inspire “an even stronger commitment to [its] shared purpose,” and 60 percent of its employees have gone on at least one trip. But not all purpose-driven companies have a direct contribution structure. Other examples of purpose-driven companies include:
In each of these examples, the organization commits to more than delivering value to its direct stakeholders. These purpose-driven businesses use the profit they make to address significant global issues and positively impact the world. Demonstrating the impact of a purpose-driven businessConsumer trust in brands is declining. It’s not enough for companies to say they’re purpose-driven; they need to prove it. Purpose-driven companies must take an extra step to demonstrate that they are acting according to their purpose — another critical difference between purpose- and mission-driven companies. Verifying that an organization is purpose-driven requires transparency and third-party validation. Organizations committed to their purpose must demonstrate they’re living up to the high standards that come with existing to serve the greater good. Enlisting an outside party to hold the organization accountable and measure its efforts is critical. There are a few models that measure and validate companies doing purpose work. These models are not mutually exclusive from each other, and organizations could choose to follow all of these or use a combination of them:
Examples of mission-driven companiesMission-driven companies align themselves to a mission that supports business objectives. A mission gives organizations clarity, direction and focus. It supports what the organization is good at as a business and elevates the customer experience. Mission-driven companies focus on delivering value back to their key stakeholders, including customers, shareholders and employees. They don’t, however, seek to benefit a broad, global population beyond these stakeholders. Mission-driven companies measure success by revenue, profit and customer engagement. Starbucks is an example of a popular mission-driven company. Its mission is “to inspire and nurture the human spirit — one person, one cup and one neighborhood at a time.” Starbucks doesn’t exist to solve a significant societal problem, like poverty, climate change or racial inequity. It exists to enrich its customers’ lives with its coffee and coffee shops. Starbucks’ mission statement is still clarifying, elevating and inspiring, but it’s not focused on solving a global problem or delivering global good. Other examples of mission-driven companies include:
Determining the best model for an organizationChoosing whether to be a purpose-driven business or mission-driven one is an important strategic decision. Doing so clarifies whom the organization serves and how it should be structured. These factors influence company values, which inform the type of workplace culture needed to achieve the purpose or mission. Being purpose-driven is not the right decision for all organizations. Below are three key questions leaders should ask themselves when determining whether to be purpose- or mission-driven:
Operating a purpose-driven business requires organizations to embed purpose into everything they do, including finance and operations. This goes as deep as vetting all suppliers to ensure they meet the standards the organization has set for itself and fulfilling the highest levels of transparency in financial reporting. Purpose-driven businesses must also measure and report on their impact to remain accountable. Customers, employees, shareholders and communities can then see how committed the organization is to working toward its purpose, which deepens trust. Aligning to a purpose is a long-term strategy that requires significant business investments for the greater good. Mission-driven companies invest wisely to serve their direct stakeholders positively. Both purpose-and mission-driven companies have effective frameworks in place to guide smart business decisions. Leaders who choose the best model for their organizations have greater clarity and can more effectively drive impact and successful outcomes. • Chapter 3 • Why Purpose, Mission and Values Alignment Matters NowOrganizations are facing significant economic, environmental, political and technological changes that are influencing how employees work and how consumers buy. These changes aren’t slowing down, and they require businesses to evolve quickly and continually. Research firm Gartner, not surprisingly, recently found that seventy-three percent of
organizations expect more change in the next few years. An organization can easily get steered off track when facing significant change if it’s not clear about where it’s going and why. Aligning to a clear mission or purpose helps organizations navigate these shifts by keeping them laser-focused on making decisions in support of the organization’s “why.” Factors driving the need for purpose, mission, values alignmentEmployee and consumer expectations are rising. Organizations can no longer be in business solely to sell things. Stakeholders demand better business practices and want organizations to be environmentally and socially responsible. Rising employee expectationsEmployees expect more from their employers than ever before. In addition to looking for flexible work arrangements and professional growth opportunities, employees want to find purpose and meaning in their work. Millennials, which are now the largest generation in the workforce, are driving this shift, but these higher expectations are becoming the status quo among all workers as social consciousness increases. A recent survey conducted by BetterUp found that 90 percent of employees — across age and salary groups — are willing to trade a percentage of their lifetime earnings for greater meaning at work. A workplace culture survey conducted by LinkedIn found similar results: seventy-one percent of respondents said they would be willing to take a pay cut to work for a company that has a mission they believe in and shared values or guiding principles. Employees also expect organizations to be environmentally responsible and implementing stronger diversity and inclusion programs. Employers are taking note. Thirty-eight percent of executives see their organizations taking on more responsibility for societal issues as something that will impact the organization over the next couple of years. Rising consumer expectationsConsumers are also
making purchasing decisions based on an organization’s purpose or mission. Accenture recently surveyed nearly 30,000 consumers and found that 63 percent “prefer to buy goods and services from companies that stand for a shared purpose that reflects their personal values and beliefs, and are ditching those that don’t.” Consumers
clearly want to buy from organizations that use high-quality ingredients and treat employees and the environment well. It’s not enough for organizations to say they’re acting in line with a mission or purpose. Transparency and trust have never been more critical. Seventy-four percent of consumers crave greater transparency from companies, yet, nationally, trust began to decline in 2017 at a steeper rate than ever before. If companies say one thing yet act another way, organizations will damage trust between themselves and consumers, and consumers will take their business elsewhere. Being
mission- or purpose-driven is no longer a choice. Employees expect their work to contribute to an organization’s mission or purpose, and consumers are keeping tabs on whether the brands they buy from are acting in the best interest of their stakeholders and the communities they impact. The shift to purpose-driven businessBusinesses are taking note of the shifting dynamics that reward organizations for being purpose-driven as well. Larry Fink, CEO of BlackRock, the largest multinational investment management firm in the world, penned a letter to CEOs in 2017 that brought socially conscious investment to the national stage. Fink noted the economic, technological and political changes that businesses need to be aware of today. He told clients, “we will be looking to see how your strategic framework reflects and recognizes the impact of the past year’s changes in the global environment. How have these changes impacted your strategy, and how do you plan to pivot, if necessary, in light of the new world in which you are operating?” This letter indicated, on a well-respected, global stage, that profit is no longer the only thing that matters — even to investment firms. A more recent indicator of companies moving beyond shareholder profits came in August 2019 when the Business Roundtable issued a new statement on the purpose of corporations. Nearly 200 CEOs agreed to move beyond “shareholder primacy,” which states that corporations “exist principally to serve shareholders.” Instead, these CEOs agreed to lead their companies for the benefit of all stakeholders, including customers, employees, suppliers, communities and shareholders. These official declarations are driving businesses toward purpose-driven models. Yet, both purpose- and mission-driven frameworks support better business because each requires organizations to evolve continually toward being better tomorrow than they are today. The most important thing for organizations to do is to understand their “why,” create alignment across the organization and do the work required to live the organization’s chosen path. A word on visionOrganizations have traditionally paired their mission statement with a vision. Vision is what the organization will accomplish and by when. It defines what problem the organization is trying to solve and the aspirational future state the organization hopes to achieve. Vision is specific and time-bound, unlike purpose and mission, which organizations continuously measure against and work toward. Organizations that use vision statements should be willing to hold themselves accountable for achieving them within a certain amount of time. Vision statements have become increasingly unnecessary in today’s business environment. They’re typically redundant with other strategic elements, like business objectives, which can create confusion. Vision can also be complicated to manage as businesses encounter an increasing rate of change, requiring them to shift their vision frequently. Organizations that forgo a vision statement in favor of a clear, consistent purpose, mission and values create better alignment and momentum. • Chapter 4 • Why Values are ImportantValues are what an organization believes and the behaviors it agrees to embody. Some organizations call these guiding principles, company principles or company beliefs. Mission and purpose answer the question of why an organization exists. Values answer the question of how it gets where it wants to go. Values give an organization the structure needed to empower employees to work toward achieving the purpose or mission collectively. Not every employee has a seat at the boardroom table, but they do have a role to play in living the organization’s values. Values inform decisions and give employees guidance on how they’re expected to do their job and interact with colleagues, clients and partners. They create a common language across an organization. Values also set expectations for how the organization promises to interact with its stakeholders. Choosing authentic valuesAn organization’s values or guiding principles should support its “why” and its business objectives. Organizations should consider what behaviors will reflect the organizational culture and drive successful outcomes when choosing values. Values should be both authentic and aspirational, pointed toward what the organization is committed to becoming. Ultimately, when values align with an organization’s purpose or mission, the speed at which they can achieve results accelerates. A business that needs to maintain a high-level of client service to fulfill its purpose, for example, needs values in place that build trust with clients. Earning trust may mean the organization expects transparent communication and action-oriented behavior from its employees. A health sciences company that relies on accurate scientific practices to achieve its mission may choose integrity as a value. Prioritizing integrity at the organization means employees are expected to behave ethically and report behavior at all levels of the organization if it doesn’t support the value. Leaders might establish multiple communication channels for employees to report unethical behavior, including anonymous channels, and develop policies stating that anyone reporting unethical behavior can do so without fear of retribution. The organization can more effectively work toward its mission when employees embody integrity as an organizational value. A technology company with a mission to develop and deliver innovative technology needs values that support innovation. Innovation often requires risk-taking and collaboration. The company would be wise to incorporate these desired behaviors as values to encourage employees across the organization to try new things, push boundaries and share ideas. Leaders can incentivize the value by creating rewards and recognition for innovative ideas or provide employees with dedicated work time to pursue innovative strategies. Organizations that have values, guiding principles, company principles or company beliefs misaligned to their purpose or mission should spend time redefining values. These organizations can ask themselves:
Activating valuesEstablishing a set of values is just the first step. Activating those values is where organizations create true impact. Organizations should start by clearly defining what each value means to employees and their behaviors. Clearly defined values create shared understanding and consistency across an organization. This clarity empowers employees to embrace the values and work accordingly. Let’s consider an organization with a value of being growth-minded, which is defined as having a
curious mindset to help grow the business. A growth-minded value can only become part of how the organization operates when employees understand what the value means and how they are supposed to act based on it. Below are some additional ways an organization can activate its values or guiding principles:
Values are essential to achieving a purpose or mission. They influence employee behavior by setting expectations for how the organization expects employees to interact with colleagues, partners and customers. • Chapter 5 • Business Results of Purpose, Mission and Values AlignmentPatagonia regularly receives accolades for being a purpose-driven company. Corley Kenna, Patagonia’s Director of Global Communications and Public Relations, said in a recent interview, “We’ve found that when we put the planet first and do the right things for the planet, it winds up being good for business. It has proven itself over and over again.” The numbers back this up. Patagonia’s revenue has quadrupled since Rose Marcario began as Patagonia’s CEO in 2008. Marcario, who has led the effort to intensify the company’s activism in pursuit of its environmental purpose, said in an interview with Fast Company that “doing good work for the planet creates new markets and makes [us] more money.” Organizations like Patagonia experience better business outcomes with purpose, mission and values alignment. Consider Certified B Corporations as another example. Organizations that earn B Corp certification are holding themselves accountable for working toward their mission or purpose. Recent
research found that B Corps have higher sales growth and above-average brand ranking compared to other brands in their categories. Purpose- and mission-driven companies are better to work for and do business with because their commitment to their “why” enables a better customer, employee, partner or shareholder experience. How purpose, mission and values affect business metricsA workplace culture survey conducted by LinkedIn found that 87 percent of Americans say having pride in the company they work for matters. Yet, only four in 10 U.S. employees strongly agree that the mission or purpose of their company makes their job feel important. Gallup predicts that organizations could reduce absenteeism by 41 percent and improve quality by 33 percent if organizations increase this ratio to eight in 10 employees. Employees also want to know how their work impacts the organization’s mission or purpose. Gallup found that employees are three-and-a-half times more likely to be engaged when employees see how their work connects to the organization’s goals. The impact of strong employee engagement is far-reaching. Organizations scoring in the top quartile of employee engagement surveys experience better customer engagement, productivity, retention and 21 percent higher profitability. Purpose and mission impact real business outcomes. Below are four additional ways being purpose, mission and values aligned impacts business in a positive, tangible way:
Distraction, disengagement and inconsistency result when purpose, mission and values are out of sync. Organizations experience higher profitability and better retention, engagement, innovation and creativity when purpose, mission and values are clear. Employees work more effectively together toward a shared objective, and customers trust organizations that work toward delivering positive value to their stakeholders or a larger global community. Unique challenges of being a purpose-driven businessCompanies cannot create a purpose or mission statement and then call their work done. Organizations that say they’re purpose- or mission-driven but then don’t operate accordingly will lose trust from important stakeholder groups, including employees, customers and shareholders. This risk is higher for purpose-driven companies because they could be accused of purpose-washing. Purpose-washing is when an organization uses purpose primarily as a marketing tactic or campaign versus using it to inform strategic business decisions (e.g., launching a marketing campaign about sustainability or combating climate change, but then not having sustainable business operations). Audiences who interact with the brand, including customers, partners and employees, ultimately determine whether the organization is authentically living its purpose. Nike, which developed marketing and advertising campaigns around female empowerment and equity, was later called out for purpose-washing when ex-employees sued the company for gender discrimination and bias, inequitable pay and sexual harassment. Nike serves as an example that organizations must be authentic in their purpose efforts by first walking their talk before taking on a specific cause or issue. Organizations that choose a purpose-driven path must have accountability measures in place to demonstrate progress made toward achieving their purpose. Otherwise, they create significant brand risks when they say one thing externally but then act another way internally. • Chapter 6 • The Role of Strategic Communication in Activating Purpose, Mission and ValuesSeventy-nine percent of business leaders believe that purpose is central to their organization’s success. Still, fewer than half of employees know what their organization stands for and what makes it different from competitors. Purpose, mission and values activation requires strategic communication that provides clarity and alignment and establishes expectations. Gallup employee engagement research over the past 20 years has repeatedly found that for employees to be productive, they need clear communication about the organization’s purpose or mission. Employees who understand the purpose or mission and how they contribute to it are more motivated and passionate about their work. Key steps to activate purpose, mission and valuesPurpose, mission and values work starts with defining and articulating what these terms are, developing an activation strategy and aligning leaders as champions. Communication is vital in each of these phases. Companies cannot bring purpose, mission and values to life without comprehensive and continual communication. Step 1: Select Purpose or MissionOrganizations must first choose whether to be purpose- or mission-driven. This is often done during executive workshops where the existing business elements are reviewed, revised or eliminated. Guidance from an external party is helpful at this stage and leadership input is essential. Step 2: Define and Articulate Purpose or Mission and Supporting ValuesThe next step is to define the organization’s purpose or mission and values that support the path to why. Employees should know what each statement is and why it’s important to the organization. Communication should be clear, concise and transparent to create a shared understanding of what the organization means by its purpose, mission and values. This clarity helps employees understand what the organization is working toward, why it’s important and what role they will play in it. Step 3: Develop Organizational Strategies and Align LeadershipLeadership must determine what needs to be done to achieve the purpose, mission and values after the organization defines them. Acting on them often requires openness to organizational changes, including changes to business operations, processes and sourcing partners. It also means determining what
measurement model the purpose-driven company will use to hold itself accountable. These changes can be challenging, requiring consistent, clear and frequent communication among leaders. Step 4. Activate EmployeesOnce executives are clear on what needs to be done to achieve the purpose or mission, they need to inform, motivate and educate employees to take the actions necessary to get the desired results. Activating employees requires consistent communication focused on helping them understand their role in the purpose or mission, then empowering inspiring them to embrace and live it. The internal communication strategy should leverage multiple channels to accommodate different learning styles and can incorporate videos, infographics, written documents and in-person events. Employees are ultimately responsible for doing the work required to achieve the purpose or mission. They need to buy in to why it’s important, and they need to know how they can work toward achieving it. Enlisting support from employee ambassadors who are naturally influential can be effective for motivating other employees to embrace the purpose, mission and values. Reviewing and rewarding employees against not only the values but also the work they’re doing in support of the purpose or mission can effectively reinforce the organization’s commitment to it. Effective communication strategiesOrganizations undertaking a significant purpose, mission and values initiative (versus simply refreshing values) may consider approaching the initiative from a change management communication perspective. Activating a purpose or mission and its supporting values often represents a significant organizational change. It can include changing employee behavior to work toward the purpose or mission and live by the organizational values. Changes like these can fail when companies neglect to communicate effectively. Activating purpose, mission and values requires a commitment to proactive, frequent and clear communication that helps to educate, inspire, create new habits and build trust. Organizations can do this by:
Infusing the purpose, mission and values into everything the organization says and does helps drive clarity and understanding and motivates employees to embrace the organization’s “why” and “how.” Effective communication has the potential to turn employees into advocates both inside and outside the organization. Measuring the success of purpose, mission and values activationThere are numerous metrics to track that can provide insight into how effectively the organization is activating its purpose, mission and values. These metrics include:
Organizations should choose metrics they can routinely track to measure the performance of purpose, mission and values activation. Evaluating these metrics helps leaders identify misalignment and spot areas for improvement. • Chapter 7 • We Must All Do BetterBeing purpose- or mission-driven is no longer a choice. Employees want to know the work they do means something and has an impact beyond their paycheck. Providing a job to employees is no longer enough. Consumers want to do business with companies that are dedicated to a cause bigger than their own profits. Consumers buy from companies more than once when they trust them. How businesses behave strongly impacts that trust. Providing a high-quality product or service is no longer enough. Shareholders want to invest in companies that are in it for more than just profit. They know that companies dedicated to something larger than themselves will be more successful in the long-run. They expect the businesses they invest in to have a clear direction, know why they exist and provide a consistent, high-level experience based on values or guiding principles. Delivering strong shareholder returns is no longer enough. The future success of a business depends on whether it can effectively align to a purpose or mission, and inspire employees to act based on a guiding set of shared values. Today’s organizations need clarity, transparency, and accountability. They need to do better. Let’s start a conversation on driving meaningful strategic growth with purpose, mission and values.Contact us |