vision statement pay-offs

8/13/2019 Vision Statement Pay-Offs

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Vision Statement Pay-offsi)

It crystallizes senior executives ownviews regarding the firms long termdirection.

ii) It reduces the rudderless decisionmaking.

iii) It is tool of winning the support of orglmembers for internal changes that willhelp make the vision a reality.

iv) It provides a becon for lower levelmanagers in forming departmentalmissions, setting departmental objectivesand crafting departmental & functional

strategies.


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Linking Vision with Cos Values

In the course of deciding Who we are & wherewe want to go , many Companies also come upwith a statement of values to guide the Cos

pursuit of its vision.

Values means cos beliefs, business principlesand practices that guide the conduct of itsbusiness, the pursuit of its strategic vision andthe behaviour of company personnel.


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Values relate to :

Treatment of customers/employees Integrity

Ethics

Innovativeness

Emphasis on quality /services

Social Responsibility & CommunityCitizenship.


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Intel's Corporate Values are:

Discipline.

Risk-taking.

Quality Customer Orientation.

Results Oriented Atmosphere &

Being a Great Place to Work.


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At Intel, all employees badges areemblazened with the Cos values &employees are trained in over 40behaviours exemplifying those values.

Du-Pont which calls itself a sciencecompany & makes a wide array of

products, stresses 4 values:


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Safety.

Ethics. Respect for People &

Environmental Stewardship.

The first 3 values exist since theinception of Co i.e. over 200 yearsago, when was founded by E.I.Du-Pont.


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Loblaw, a major grocery chain inCanada focuses on just two main

values in operating its stores andthey are:

Competence & Honesty .

The top management strives topromote only those who are smart &honest.

Core Values are derived out of theorgs mission statements and aid indifferentiating the Orgn from others.


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Gap between the values and actual

Conduct

It does happen at times that there is awide gap between the stated values ofthe Co and its actual conduct.

e.g. Enron- touted 4 Corp values:

Respect, Integrity, Communication &Excellence.


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But however, a flagrant disregard forthese values by some top officials in

their management of the Cosfinancial & accounting practicestriggered the companys implosion.

One of the Worlds Big-5 publicaccounting firms, Arther Anderson

was renowned for its commitment tothe highest standards audit integrity.


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The failure of Anderson at Enron,WorldCom & other cos led to its

death.

Some vision statements simplycovering the essence of vision in aslogan to the company personnelsuch as:

Mayo Clinic: The best care to everypatient every day .


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Levi Strauss & Co:

We will cloth the world bymarketing the most appealing &widely worn casual clothing in theworld.

Micro Soft Corporation: EmpowerPeople through great software- any

time, any-place & on any device.Scotland Yard: To make Londonthe safest major city in the world.


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Green Piece:

To halt environmental abuse &promote environmental solutions.

These short slogans acts as repeatedreminders of the Where we are

headed & why helps orgn memberson the chosen path.


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Salient Features of an effectively

worded vision

The vision statement is consideredeffective in case it is managerially usefulin communicating where we are headed

and the kind of Co we are trying tobecome.

Salient features of an effectively wordedVision and they are as follows:

i) Graphic ii) Directional iii) Focused


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V) Feasible vi) Feasible & vii)easily to communicate.

Graphic:

A well stated vision paints a pictureof the kind of Co that management istrying to create and market position

of the Co is striving to stake out.


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Directional:

It must express something about the Cos

journey or destination & signals the kindof businesses and strategic changes thatwill be forthcoming.

Focused:it must be specific enough to provide

managers with guidance in making

decisions & allocating resources.


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FLEXIBLE:

It must not be rigid or once for all timephenomenon/pronouncement.

FEASIBLE:

It is within the realm of what the Co can

reasonably expect to achieve in due time. DESIRABLE:

It appeals to the long term interests of

Shareholders.


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EASY TO COMMUNICATE:

A well stated vision is ideally reduced to asimple , memorable slogan.

Like: Henry Fords famous vision of

A Car in every Garage

Nike: To bring innovation & inspiration to

every athlete in the worldIntel: Getting to a billion connected

computers worldwide


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Common Flaws in Vision

statement/s

Incomplete:

Short on specifics about where the Co isheaded or what kind of Companymanagement is trying to create.

Vague:

Lacks in providing much of indication ofwhether or how mgt intends to alter theCos current vector focus.


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Bland: Lacking in motivational power.

Not Distinctive:

Too Reliant on Superlatives:

Too Generic:Fails to identify thebusiness/industry to which it is supposedto apply, i.e. it could apply to Cos in anyof several industry.

Too Broad:It really doesnt rule out most

any opportunity that mgt might opt topursue.


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Too much reliant on thehistory of Past.

Advertising Slogans and high

concept Statements, motto.

WHAT IS MISSION ?


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MISSION

Thomson(1997) defines mission as the

essential purpose of the organisation,concerning particularly:

Why it is in existence?

The nature of business (es) it is in and The customers it seeks to serve and

satisfy


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According to Wheelen & Hunger (1999)the mission is the

purpose or reason for theorganisansexistence

Mission or purpose also describes theboundaries of business operation inthe future perspective. ( this mission

is contained in the Charter of theCompany


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Any activity falling outside the scope ofthe charter is considered ultra-virus.

Fred David observes that:

a mission statement reveals the longterm vision of an organisation in terms ofwhat it wants to serve. It describes an

organisations purpose, customers,products or services, markets, philosophy& technology.


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Research revelations:

A good mission statement, by addressingeach principal theme, must communicatewhy an org is special & different. Two

studies that linked corporate values andmission statements with financialperformance found that the most

successful firms mentioned values otherthan profit profits. The less successfulfirms focused almost entirely on

profitability. (Sexton, D A & Van Aukun, P M )


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These components of a M/S answers akey question about an enterprise,

What is our business?

Mission may be

i) Abstractional &

ii) Operational.i ) Abstractional Mission: Is like ethical

code of good quality, honesty &

integrity.


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A companys mission differs from its visionin that it encompasses both the purposeof the company as well as the basis of

competition and competitive advantage.

Although V/Ss tend to be quite enduring &seldom change but the M/S can & should

change when competitive conditionsdramatically change or the firm is facedwith new threats or opportunities.


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Ii) Operational Mission:This is morepositive in terms of markets to be served,products and services to be produced and

manner in which it would like to competewith other rivals.

e.g; A rhyme goes like:

We shall build good ships

At a profit if we can


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At a loss if we must

But always good ships.

Every mission has to fit in the broaderframework of socio-economic object ofsociety in which orgn operates. If it doesit, it will survive.

Mission sets the Co apart from other firmsof its type.


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Mission indicates what the companyprovides to society, either a service like,house cleaning or a product like

automobiles.

It also includes the firms philosophy about

how it does business & treats itsemployees.


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It tells what the organisation is now. Italso tells who we are & what we do aswell as what we would like to become.

A vision becomes more tangible in theform of a mission statement.

Mission statements are not subject to any

well-established rules regarding what theymust include.


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Effective mission statements incorporatethe concept of stakeholder management,suggesting that organisations must

respond to multiple constituencies if theyare to survive and prosper.

Primary S/Hldrs: Customers, employees,

suppliers and owners. Others also play an important role in a

particular corporate life.


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Inputs to the Development of the

Company Mission

Claims of insiders

Executive officersBoard of DirectorsStockholdersEmployees

CompanyMission

Claims of outsiders

CustomersSuppliersCreditorsGovernmentUnionsCompetitorsGeneral Public


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SOUND MISSION STATEMENT

A sound mission statement describes theorgns most fundamental intentions & theyare also called as Key Elements of a

Mission Statement; these are: a) Obligation towards stakeholders

b) Scope of the business: The arenas in

which Co will compete defined bycustomers served, the functions provided& the technology employed.


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c) Sources of Competitive Advantage.

d) View of the future: How to compete inanticipated regulatory, competitive &economic environment.

So, in view of the above elements of asound M/S, a firm answers importantquestions like:


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What is our reason for being? What is ourbasic purpose?

Our obligation towards our variousstakeholders.

What is the relative emphasis we willplace on meeting the needs of different

stakeholders.

What is distinctive about our organisation.


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What is likely to be different about the businessduring the next 3-5 years.

Who are, or who should be our principalcustomers, clients or key market segments

What are our principal goods & services, present& future.

After answering these questions the M/S helps

managers set priorities, guide strategic decisionmaking and gauge performance.


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So, in nutshell, the M/Ss essential role is to helppeople / Cos to define their business.

Following few examples of giant organisationswould make it further clear:

Ford Motor Cos Mission:

How we accomplish our mission is as important asthe mission itself. We base our mission on thefollowing fundamental values:


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People: our people are the source of ourstrength. They provide our corporate intelligence& determine our reputation & vitality,involvement & team-work are our core human

values.

Product: Our products are the end result ofour efforts & they should be best in servingcustomers worldwide. As our products areviewed, so are we viewed.


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PROFIT: Profits are the ultimatemeasure of how efficiently we providecustomers with the best products for their

needs. Profits are required for survival &growth.

Mission of FORD:

Improve Continually our products &services to meet out customer needs.


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Provide a reasonable return for ourstockholders, the owners of our business.

Johnson & Johnsons Mission:

We believe our first responsibility is tothe doctors, nurses, & patients, tomothers and all others who use our

products & services.We are committed to improve health care

throughout the world. (Baxter Travenol)


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Purpose/Need of a Company

Mission

The company mission is designed toaccomplish the following:

To ensure unanimity of purpose within the

organisation. To provide a basis for motivating the use

of the organisations resources.

To develop a basis, or standard, forallocating organisational resources.


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To establish a general tone or organisationclimate.

To serve as a forceful point for those whocan identify with the organisationspurpose and direction, and to deter those,

who cannot, from participating further inthe orgns activities.


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To facilitate the translation of objectives &goals into a work structure involving the

assignments of tasks to responsibleelements within the organisation.

To specify organisational purposes & thetranslation of these purposes into goals insuch a way that cost, time, & performanceparameters can be assessed andcontrolled.


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IMPORTANCE OF MISSION

STATEMENT

Well stated M/S creates an emotional bondand sense of mission between mgt &organisation.

Firms with a formalised M/S have twice theaverage return on shareholders equity thanthose firms without a formalised M/S (Ratrick &

Vitton).

There is always a positive relationship betweenM/S & Orgnl Performance. (Bart & Baetz).


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Firms using M/S have a 30% higher returnon certain financial measures than thosewithout such statements. (Business Week)

M/S v/s V/S

Vision is a possible & desirable futurestate of an organization that includes

specific goals, whereas mission is moreassociated with behaviour and the presentstate of an organisation.


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Assignment

Identify and critically study the Vision andMission Statements of the followingbusiness houses and the companies are:

Nike Heinz Xerox

Intel DuPont Canon

Wyeth Tata Chevron

GE Reliance Exelon

Wells Fargo Wipro Motorola

Red Hat Linux Infosys JK Bank


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Strategic Objectives / Goals:

S/.Objs are used to operationalize themissions statement.

They help in providing guidance on howthe organisation can fulfill or move towardthe higher goals in the goal hierarchy-mission & vision.

They tend to be more specific & cover amore well defined time frame.

Generally S/Os are divided into financial

and non financial categories.


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Financial S/Os are directed toward generatinggreat profits & returns for the owners of thebusiness.

Others are directed at customers society at largeor the overall development of the organisation.

Challenging objectives help to motivate & inspireemployees throughout the org to higher levels of

commitment & effort.

Proper objectives provide a yardstick for rewardsand incentives.


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Criterion of a Good S/Os:

In order to ensure the above benefits fromproperly designed S/Os, the followingcriteria would be helpful:

Measurable. (Yardstick to measure progress)

Specific. (what actually needs to be accomplished)

Appropriate. (Consistency with the mission & Vision)

Realistic and, (Achievable)

Timely. (Needs a time frame)

C t E l


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Corporate Example:

Financial Strategic Objectives:

Increase sales growth 6%-8% & accelerate corenet earnings growth from 13% to 15% per

share in each of the next 5 years (procter &Gamble)

Generate internet related revenue of $1.5 billion( AutoNation)

Cut Corporate Overhead costs by $30 million peryear (Fortune Brands)


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Non-financial S/Os:

We want to be top-ranked supplier to ourcustomers (PPG)

Reduce greenhouse gases by 10% from a1990 base by 2010 (BP Amoco)

We want a majority of our customers,when surveyed, to say they consider WellsFargo the best financial institution in thecommunity. (Wells Fargo)


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Thank You

Have a nice day ahead!

vision statement pay-offs

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