Mission and Values Statements Can Boost the Bottom Line

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Estimated reading time: 3 minutes

 

It’s perhaps the most fundamental challenge facing the Board and top-level management of any organisation. That is, the need to define what your organisation stands for and what’s its point of difference in the marketplace. A short, well-constructed mission and values statement gives employees, customers and other stakeholders a sense of purpose about the organisation.

 

Recent survey research by the Australian Institute of Management VT shows that developing an effective mission and values statement can have positive implications for organisational performance.

 

The response data in our employee engagement survey indicates that if people are aware of their organisation’s mission and values, they are:

 

  • more than twice as likely to believe that senior management cultivates a good organisational culture
  • significantly more concerned about the future of their organisation
  • much more likely to have feelings of loyalty towards their organisation (one and a half times more likely)
  • far more inclined not to consider leaving their job and gaining employment elsewhere (more than two and half times more likely to stay than someone who does not know their organisation’s mission and values statement).

 

A total of 2,223 business professionals, ranging from aspiring managers to CEOs, board members and business owners participated in the survey. Participants were drawn from the private and government sectors and reflected the broad cross-section of Australian industry.

 

What the survey tells us is that if your organisation does not have a mission and values statement, or if your employees don’t know one exists or if they do, they don’t understand what it means, you are losing a competitive edge in the marketplace because your employees are not fully engaged with your organisation’s direction. That situation has negative implications for your workplace culture and employee productivity. In turn it’s more likely that high performing staff will seek employment elsewhere, thereby putting more pressure on your employee retention efforts. And in that regard, we need to remember that it costs hundreds of thousands of dollars to replace key staff.

 

Three quarters (76%) of the survey participants said they knew what their organisation’s mission and values statement is. However, that result is ten percent down on the figure in our previous employee engagement survey conducted in 2010.

 

These findings are a ‘wake up’ call for those organisations that have a cynical or skeptical attitude about the benefits of a values statement. At the same time, there is little advantage in having a values statement that is not a reflection of what the organisation is and does.

 

Our survey found that of the 76 percent of people who said, “yes, I know what my organisation’s values statement is”, 30 percent said the values are not reflected in the way their organisation operates.

 

When we compared the responses of participants in the private and public sectors, we found that participants employed in public sector organisations were less likely than those working in private sector firms to say that their values statement reflects the way their organisation operates (56% v 65%).

 

So organisations need to ‘walk the talk’ on values statements. That means getting the participation and ‘buy-in’ of employees when it comes to developing and implementing values statements.

 

The worst values statements are those that read like they have been developed by a committee. Such statements are usually verbose and provide no point of difference for the organisation. Values statements need to be succinct and capture the purpose and personality of the organisation. They need to generate employee pride and be in sync with what the organisation is and does.

 

Of course, values statements need to be subject to regular review to ensure they maintain their relevance.

 

Organisations need to be ‘loud and proud’ about their values statement and make it visible to key stakeholders. For employees, it should be integrated into their performance appraisal system so it becomes a benchmark for employee performance.

 

More on the AIM is available here.

 

About Tony Gleeson

Tony Gleeson is CEO of the Australian Institute of Management, Victoria/ Tasmania and CEO of Idria. AIM is Australia’s leading provider of professional development and support services for managers and leaders. AIM VT’s subsidiary, Idria is an international leader in simulation learning programs. Tony has international experience in educational design, development and delivery. He has worked in major professional services organisations including Deloitte, PricewaterhouseCoopers and CPA Australia.

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