Universal Journal of Management and Social Sciences
Vol. 3, No.8; August 2013
Organization's Mission Statement and Organizational Performance
Mohammad Taleghani1, & Mojtaba Noormohamadi Liyasi2
Department of Industrial Management, Islamic Azad University, Rasht Branch, Rasht, Iran, 2M.A of
Business Management, Islamic Azad University, Rasht Branch, Rasht, Iran
Abstract
Researchers know organization mission statement an enduring statement of underlying principle of
organization such as targets, strategies, standards and expected values to achieve them. The mission
statement of the organization helps to focus on humanity effort and cause all staff and managers in
organizations have shared values and expectations and with passing time, this value strengthened and
causes creation a kind of value and goal that people outside the organization know them as corporate
introducer, Therefore, conducting this study is important because it is said that in strategic management
literature, mission statements is an integral part of corporate strategy, because it can affect the
company performance. Therefore, in this paper, the relationship between the characteristics of the
organization's mission statement and organizational performance are examined.
Keywords: mission statement, organizational performance, strategy
1
1. Introduction:
If consider an organization that for the first time lunch the work, Maybe we can understand the
organization's mission better. A newly established organization, initially only intended to collect ideas
and theories, launch of a new organization, depends on a set of beliefs that the organization with a kind
of technology can supply a product to number of customer in a profitable price in a geographic area.
Basically, the owner of a new established company is on the belief that company's management
philosophy will lead to create a desired image for the public and that such a concept, or an image can be
transmitted to others that as a result, significant group will be fan on it. If the organization in debut of
this series makes beliefs as a note, resulting document will be a mirror that reflects the principles or
core beliefs. It means same thing that represent the organization's mission (Rezvani and Akbarzadeh,
2010). Many researchers have demonstrated that mission statement enterprise can provide purposes,
goals, products, markets and the philosophical nature of organization to the public audience. Benefits of
such statements have been considered in many researches and it is believed that all companies should
have a mission statement for themselves. Studies that conducted by reputable companies in the world
shows that 90% of 500 top companies of Fortune magazine have a mission statement (Bartas, et al,
2002). But in the meantime, some organizations prepare their mission statement, because they feel it is
usual and they don’t know it as a real commitment. Organizations that formally make their mission
statement develop and systematically appeals about it, consider it as a living document. These
organizations, know their mission statement as an integral part of the organization culture that will
achieve great benefits (Rezvani and Akbarzadeh, 2010). Hence, in this study we were looking for first
what features should an organization’s mission statement have, and secondly, how these features will
impact on organizational performance. According to Peter Drucker, Business of an organization is not
defined but its name or its Statute but is defined by its mission. He adds that only a clear definition of
the mission and purpose of the organization, which made it possible to achieve realistic goals and
influence on its success or failure. According to John Keen, the ideal of an organization leads business of
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Universal Journal of Management and Social Sciences
Vol. 3, No.8; August 2013
organization, in order to enhance the performance. A proverb says: "Since there are no ideal people in
an organization, will be destroyed” Or in a more general case, since it is not ideal, resources are wasted.
According to John W. tithes, Task of strategists is see the organization in way that it should be not in a
way that they are (David, 1997). Most scholars in strategic management point out to identify various
aspects of an organization's mission and its impact on other stages of planning and strategic
management. The mission of the company should describe products, markets and technologies and be a
reflection of values and priorities of the company’s strategic decision makers (Pearce, 1994). So,
choosing an organization’s mission, is often "under the influence of personal goals and values of senior
management, is (Manson, 1993) to provide mission of an organization can assist external experts or by
a general call, gather strategists opinion of organization and discussed at various meetings and after
obtaining the opinion of the people, ratified it (David, 1997).
2-2 Theoretical Foundations of the organization's mission statement:
2-2-1) define the organization's mission statement:
Researchers know mission statement of organization an enduring statement of principles underlying the
organization such targets, strategies standards and expected values to reach them (Strong, 1997). In the
management literature, need for a mission statement for the organization has a long history (Palmer
and Short, 2008). Drucker first time used the term in the early '70s, and since then, many researchers
focus on this concept (Orwig & Finney, 2007) A mission statement is a developed document that defines
the goals of a stable and unique organization : Why do we exist? What are our goals? What we want to
achieve? These are some basic questions that the mission statement, aims to answer (Barrett and
Tabun, 2001). Mission statement includes goals, values, beliefs, and the organization's competitive
advantage (Biloslavv and Lin, 2007). In fact mission statement is the primary tool needed by managers
(Arving and Finney, 2007) that is guidance to organization performance. For this purpose mission
statement is focus of attention of any manager therefore following 2 goals: 1 - Guidance for decision
making; 2 - to stimulate and motivate employees to achieve organizational goals (Forbes and Senate,
2006) Mission Statement is an integral part of the strategy, because both have a significant impact on
performance., There are many reasons to have a mission statement on organization, including
communication tools (Sofi and Lions, 2003).A tool to guide development and implementation of
strategic planning processes (Palmer and Short, 2008), A guide for style of leadership (Analoy and
Karami, 2002)and also attract customers who are important to the organization (campel et al, 2001). But
the most important reason for having a mission statement can be expressed in creating a common
vision. This Common vision, which is essential to effective decision-making and organizational unity,
cause build commitment in individual toward organization goal. Mission statement, has many advantage
for organization. One of the most important benefits is that mission statement considered as guiding
principles to whole of business. Mission statement says to investors, employees, suppliers, consumers
and lenders and all stakeholders in company what is the goal of company? What is the symbol of the
company, and it plans to reach where (Sofi and Lions, 2003)
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Universal Journal of Management and Social Sciences
Vol. 3, No.8; August 2013
2-2-2) Nature of the organization's mission:
Expression of attitude: at least for two reason organization mission has a wider range:
First, if organization mission express in a good way, makes it possible for future generations that
consider by relying on management innovative of every kind of goal and long-term and possible
strategies. If in expressing organization’s mission, have limit more than norms, we will inhibit the
creative growth of organization. On the other hand, if organization's mission expression in a very general
manner, and in a way that does not remove any of possible strategies will not have any performance.
Second, during the preparation of the organization's mission should use statement that includes
different views and provide different needs and interest groups of organizations. If organization’s
mission write in a good manner indicate the attention that organization relatively pay to provide claims
of different groups of stakeholders. If organization’s mission express in a valuable way reinforce positive
feelings toward the organization and will also inspire people, motivate reader and encouraged him to
action.
If the organization's mission express in effective way give the impression that the organization has a
clear direction and path and it worth that spend time in that organization, supported it and invested in
it.
Closer together to the opposite point of view: Why some strategists doesn’t show ant willing to design
or prepared organization’s mission. First, this question “what we are doing?” create contradictory views.
Often this question is causing controversy among strategists in the organization. Those who work for
long period think that know each other ,suddenly understand that infect they disagree with each other.
Before addressing activities related to the strategy of an organization negotiation should be done, in
cases individuals’ conciliation and eventually reached an agreement on important issues.
Attention to Client: The main reason for preparing the organization’s mission is that looking to attract
customers who attach importance to the organization.
Declared social policy: involve philosophy and way of thinking in highest levels of the organization. For
this reason, social policy affects In process of trade policy formulation. Social issues, not just clarifies
what the organization owe stakeholder groups, but also define responsibility toward consumers,
environmentalists, minority groups, communities and other groups.
2-2-3) Components of the organization's mission:
The mission of the organization, in terms of size, content, form, and the details are different. Most
experts and authorities in strategic management
say that component of the
organization's mission should have 9 prominent features. As explain in section of definitions and terms
and strategic management process, the first stage of the strategy, is determining the organization's
mission statement. Mission Statement (organization philosophy) is described by the nine constituent
elements that are given In Table 2.1.
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Universal Journal of Management and Social Sciences
Table 2-1) Components of mission of the organization
Description elements
?Who are the organization’s customers
?What are The main products, services of company
Geographically where the company competes?
Does the company uses the most advanced technology?
It is necessary for growth and financial health of commitment?
What are moral beliefs, values and priorities of the company?
What kind of competitive advantage or distinctive competencies
company has?
Does the company respond appropriately to social issues, society
and the environment?
Is employee is a valuable asset for the company?
Vol. 3, No.8; August 2013
The main elements of mission
planning
Customers
Products and Services
Markets
Technology
Attention to survival, growth and
profitability
Philosophy
Special feature
Attention to people‘s Imagine
attention to the staff
We cannot ignore the importance of determining the organization’s mission in the process of strategic
management, on the one hand, and the role of strategic management in the business environment is an
important role. Therefore, by accepting these assumptions, the importance of the mission and strategic
management in organizational success, it is necessary to develop document in organization now. What
are the forming components of organization’s mission? The mission of the organization, in terms of size,
content, form, and the details are different. Most experts and authorities in the strategic management
think that organization's mission’s components should have 9 prominent features. Since the mission of
the organization is usually seen more strategic management process and everyone is aware of it, so it is
important to include all the 9 main sectors.
Differences in strategic vision and organizational mission statement:
By the definition that presented from mission statement, this impression may arise that strategic vision
and mission statement follow one purpose and will have one output, both are associated with a concept
meanwhile, the mission statement is the starting point for forming strategic vision. This means that the
mission must first be identified, and then the correct path is selected. When mission statement is
written, strategic vision contained in it. In fact, Formal written mission statement includes all or most of
strategic management elements: definition of business, strategic vision, strategy and
objectives (Harrison, 1998), (Taftoy and Chatterj, 2004). Mission Statement in relation to the current
scope of business organization (Who we are and what we're doing) while strategic vision, while strategic
vision, depicts the future organization business (where we are going). Mission represent, purpose and
goal of current time while outlook attention to future. (Thompson 2001). Mission is about meeting the
expectations of shareholders while the Outlook is more about issues that are in the context of its
realization. Outlook deal with creating long term goal that make a new competitive situation (“Miller
and Dess’, 1996) stated that strategic vision, describes dreams and aspirations for the future that
resorted to feelings and aspirations of members and encourage them, while the mission involves issues
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Universal Journal of Management and Social Sciences
Vol. 3, No.8; August 2013
such purpose, competitive differentiation, market definition, description, product / service, important
economic interests and value (Desmit and prinz, 2008)
Key role in the company's mission statement
Strategy Implementation
 making a process in the company's vision
 reliability and stability in changes
 Provides a reasonable allocation of resources
Internal and external communications
 Motivation in inner and external communication of organization
 Inform to employees of companies and align them to implement them .
Management and Leadership
 Redirecting behavior
 improve individual and team performance
 power of evaluating different behaviors
 guide current decisions, critical and strategic
 help to consuming time
 clear leadership
Organizational atmosphere
 positive impact on the climate and culture
 strength personal relationships within a company
 strengthen the sense of unity and belonging
 effect on employee commitment and satisfaction
 reduce uncertainty for employees
 reduce doubts, conflicts and ambiguities
 inspiring enthusiasm and passion in company
 clarify priorities and vague issues, , undefined and even conflict in company
 help prevent counterproductive and destructive processes
Source: Musek Lešnik, 2008; Stallworth Williams, 2008
2-3 Organizational performance
2-3-1) definitions of organizational performance
One important question in business is why some organizations success while other agencies failed.
Organizational performance is the most important issue for-profit and non-profit organizations. Notice
factor that affecting organization performance, is very important for managers, because this issue is
important to take appropriate steps in the beginning. However, definition, conceptualization, and
measurement of performance are not easy. Researchers have different beliefs about organizational
performance but its still remains a controversial issue (Barney, 1997). Performance means quality,
condition, or function. Therefore, organizational performance is a general structure which refers to the
operations of enterprise (Roadster, 2008). According to the Javier (2002) definition, performance is
equivalent with economy, efficiency and effectiveness for a specific program or activity. However, Daft
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Universal Journal of Management and Social Sciences
Vol. 3, No.8; August 2013
(2000) states that organization function in an effective and efficient manner for organization activity to
achieve goals by using resources. Quite similar to Daft, Richardo (2001) state that organizational
performance is organization activity achieves goals and objectives of the organization (quoting Abu
Jrard, Yusuf, Nick Bean, 2010). Hu (2008) states that organizational performance is an indicator that
measure the achieving the goals of an organization or institution. Most famous definition of
performance by Nelly and et al (2002) provided: “process of quality and efficiency, and effectiveness of
past actions." According to this definition of, the operation is divided to two components: 1) a
description of how the efficiency of resource use in the production of products or services, means
relationship between the actual and desired outputs for given inputs 2) the effectiveness that described
the degree of organizational goals. These objectives are usually determined in the form of events (grade
outputs compliance with customer requirements), availability (aspects such as frequency, provided
among priority groups, and physical distance) and quality (degree of fulfillment of the required
standards) are (dallari and Versington, 1996).
2.3.2) measure organizational performance
Measuring the performance is a title that will be discussed more, but less defined (Nili et al, 1996).
Performance evaluation is measuring data that indicate progress toward desired outcomes. The results
should come from special activities Also measuring performance provides a way to evaluate this activity
(Rafi zadeh, 2009). Performance measurement systems are designed as a tool for monitoring and
supervision. According to Nani and et al (1990) Performance measurement is a process of ensuring that
an organization pursues strategies that will lead to the goals. Although performance measurement in
the public sector is relatively new, but considerable research provide about performance in late 1970s in
terms of the performance measures, performance indicators, performance evaluation, and quality
(Holloway, Rose, Loton, 1999). Public sector organizations, compared with their peers in the private
sector are different. It means maximization of Profit is not desired and the ability of such organizations
to lower revenues, and overall, there are no agreed indicators to performance measurement. For this
reason some scholars know performance measuring impossible in public sector. Sink (1991) know
performance measuring a complex task, difficult, challenging, and important. Performance level is a
function of the efficiency and effectiveness of enterprise operations, Therefore, measurement of
performance is the process of quantifying the efficiency and effectiveness of an organization.
Undoubtedly, performance measurement is not a goal, but is a tool for effective management.
Performance measurement results show that what happened, but does not show the reason. In order to
make effective use of the performance measurement, an organization needs to transfer from "measure"
to "management"; this concept is known as performance management in organizational Performance
research (Amaetunga & Baldry, 2002). However, should consider that performance measurement
includes measuring of performance, in case that performance management, by using performance
measurement outcome seeks to manage it (Radnor and Mac Goyer, 2004).
2-3-3) approach of performance measurement
In performance measurement, there are two main approaches: objective and subjective and both
approaches have their advantages and disadvantages (Allen et al, 2008). Objective scale, are more
realistic, but in terms of coverage area is limited to financial data and doesn’t cover other organizational
aspects. On the other hand, subjective scale is less realistic, but provides rich descriptions from
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Universal Journal of Management and Social Sciences
Vol. 3, No.8; August 2013
organizational effectiveness. These scales, allowing a wide range of organizations in various industries
analyze. Therefore, the generalization of findings base on subjective scale is more. Also, subjective scale
cover analysis element based on the perception that has a special place in social science research. This
question that which one these approaches should be considered in measurement of performance,
depend on organizational orientation and attitude of managers.
3- Conclusions
The purpose of this study was to examine the relationship between characteristic of organization's
mission statement and organizational performance. This research began with the question: What is the
relationship between the characteristics of the organization's mission statement and organizational
performance. Based on previous literature, the characteristics of the organization’s mission statement
include the completeness, being real, being flexible, and being distinctive and applicable. Results
showed there is a positive significant relationship between the characteristics of the mission statement
and organizational performance.
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