Does a company having a clear mission lead to more profits for said company?
Mission and vision represent one of the most confusing intersection points for modern executives in midsize to large businesses, I’d argue. They didn’t come up on mission and vision. To them? Those are newer concepts. They “made their mark” on their companies with financials, products, services, command and control, and the like. It’s only recently that anyone has talked about fluffy junk like employee engagement, morale, recognition, and the like. For years, many executives thought of that as “the domain of HR” — as in, to be blunt, things they couldn’t give a crap about. Put it this way: most executive guys (usually guys, but not always) care about who owns P&L. They do not care about who owns mission and vision. It’s really that simple.
This, of course, is beginning to change. Disruption is scaring a few people — or at least the execs who aren’t burying their head in the sand chasing retirement. Companies who get disrupted by well-heeled upstarts usually suffer from slow, plodding decision-making — so there’s an increasing focus on org structure now. Employee engagement still seems a bit fluffy to execs, but they’ve heard a couple of positive stats. Should they embrace that concept?
Now, as all this is happening, here’s the reality. These people (the senior leaders of companies) are tasked with making money and showing growth to investors or shareholders. That’s the long and short of it. Their bonuses are contingent on that — and in some places, their ability to remain employed is contingent on that. As a result, their focus is on the money. And their time? Well, they view it as precious. (In reality, many waste all day in no-priority meetings.) So if the focus is money and time is precious, well, these fluffy concepts need to show ROI. Mission and vision need to mean something to the bottom line. If not, there’s no time to worry about them — and they’ll get kicked to HR, where they will die a slow death in a sea of webinars and passive-aggressive company-wide emails. We all know the drill.
That leads us to our central question: do mission and vision lead to profits?
Profitable mission and vision: Some earlier research
There’s some earlier work that companies having empathy is tied to revenue growth. And, there’s also been research that “compassionate cultures” lead to increased profits. I admit that “revenue growth” is different than “profits” — although both are generally good for companies — and I also admit you can find a study to prove almost anything, but this is our baseline. There are examples whereby concepts like mission and vision are tied to money. Let’s move on.
Profitable mission and vision: Some newer research
This article, “The Type Of Purpose That Makes Companies More Profitable,” is recent from Harvard Business Review. It’s based on research by a professor from Harvard and one from NYU. Specifically, here’s what they did:
In a new research paper we tried to determine if all the resources companies are putting toward at least the appearance of purpose are working. We constructed a measure of corporate purpose within a sample of 429 U.S. companies, based on more than 450,000 survey responses of worker perceptions about their employers. Our evidence comes from a proprietary survey from the Great Place To Work (GPTW) Institute that covers employees across all hierarchical levels within hundreds of organizations that rate their employers in terms of a wide variety of organizational workplace variables.
429 companies + 450K survey responses is a decent sample size. The advantage of this setup is that it’s rooted in actual employee beliefs about their employer. There are still potential biases, but it’s controlled somewhat within this methodology.
They ultimately found two different types of companies in terms of mission and vision (“purpose”):
- High Purpose-Camaraderie (“This is a fun place to work and it feels like a family”)
- High Purpose-Clarity (“Management has a clear view of where the org is headed and how to get there”)
Only 1 of the 2 leads to higher profits. I bet you can guess.
Profitable mission and vision: Purpose-clarity
Yes, it’s high purpose-clarity. This makes sense. The first type (camaraderie) are usually companies with a lot of homophily. Those can be fun places to work and you feel comfortable being there — nothing to shake a stick at. But, there are issues. Those places are usually toxic to new ideas because there’s a very ingrained “Well, we’ve always done it this way” mentality. And because everyone is friends/family, everyone covers for one another. Accountability on key projects can be low.
The purpose-clarity continuum speaks to two major aspects of any business:
Many companies are bad at both of these. Here’s an example of a multi-billion dollar health care company — where 7 in 10 employees are doing tasks of no value all day. To a certain extent, it doesn’t matter. The money is there and the bonuses are fat. That’s typically what the existing power core will care about. In the United States, for example, about 21.4 million middle managers add no value back to their company. That’s quite a bit of fat we could trim. Why don’t we? Because so long as the company is making money, no one really gives a shit.
Let me keep it simple on why priority-aligned mission and vision matter. When priorities are not there, managers are allowed to create or define their own priorities. This usually leads to a culture where everything is urgent. When an employee spends an entire year chasing “urgent” projects around like a Labrador with a tennis ball, he/she gets burned out. He/she leaves. Turnover hurts profits. Priority alignment around mission and vision and work reduces turnover. So, it’s more profitable!
I try to think about work in different ways, and I also try to call out some managerial BS we’ve all experienced. If that kinda sorta interests you, I do a newsletter every Thursday. Feel free to join up.
Simple math, but many miss this every day when making decisions.
So how can we make mission and vision profitable for us?
Here are a few steps. I’ll keep them brief.
Understand and practice core values: Here are a few examples. Don’t just slap it on the wall. Execs need to live it. People need to showcase it. Embed it in your business from onboarding onward. Usually core values are Double Talk City. I say “serve with integrity,” then I can go bone my secretary and steal from my customers. You gotta live it.
Move it from HR: If HR owns mission and vision, no one will give a shit. HR isn’t tied to money. People care about money. Another department needs to own it. I’d try marketing, sales, operations, or a fourth choice. Cannot be HR.
Clarity: Teach managers how to communicate. Show executives how to align and define priorities. Care about this stuff as much as you care about CAGR or your bonus.
Update mission and vision: These are living, breathing documents. As business models change, they too must change. Get employee input. Chase feedback. Be better than what you’ve been.
Stop being an asshole: We all know money matters — and matters a lot. But many cultures become self-replicating pools of assholes because we only promote those who chase the cheddar. Stop being an asshole. And hey, stop promoting assholes. Think about mission and vision and promote/advance around that — even if someone didn’t maul their numbers last year.
Most of mission and vision context and profitability comes from caring about them and not kicking them to HR, honestly.
What else would you add on mission and vision?