Vision, Mission and financial performance of the professional firm

SStaff and managers are often cynical about vision and mission statements of their own firms as well as those of their competitors. Some firms don’t even bother creating these statements. And no wonder — a proclamation on a wall that isn’t lived by makes little sense. However inspiring the message, why bother investing resources in yet another poster?

Obviously, given this attitude, the question about potential correlation of a mission or a vision with financial performance of the professional firm rarely pops up. “If we don’t see any value in this, why bother?”

I would like to push back a bit, and provide an alternative point of view for your consideration. My experience and research led me to believe there are situations in favor of mission and vision statements as well as cases where it makes no sense at all.

As I have explained in another article, company vision should be viewed as a current final destination, while mission — as daily set of activities necessary to support the attainment of that vision. Both should talk about the benefits of the target market, not just the equity owners. Vision, by definition, is long-term; if it’s attainable within a couple of days, it isn’t a good-enough vision.

Take SpaceX for example, the company makes money by launching satellites into orbit. However, this business isn’t their vision or mission. To colonize Mars in 30 years (their vision), they bring the price of launches down by 10x by building reusable rockets (their mission).

The final element of great vision and mission is their alignment: neither daily business activities nor vision & mission should contradict one another; preferably, firm’s mission reinforces its vision.

Correlation with financial performance

A while ago, in 1994, J.Collins and J.Porras published a gem of a book titled Built to last. Their research into well-known, “widely admired” companies founded before 1950 illustrates characteristics of visionary companies.

The authors compared these companies with so-called comparison companies and came to several conclusions. Two of these findings are worth mentioning here. First, cumulative stock returns of visionary companies were 15 times higher than the general market’s and 6.6 times higher than that of comparison companies. Second, these companies were characterized by their regular commitments to Big Hairy Audacious Goals, which for all intents and purposes is the same thing as company vision supported by its mission.

In one of his works management consultant David H. Maister established causation between financial performance of a professional firm with quality & client relationships which, in turn, are caused (in part) by employee satisfaction caused (in part) by coaching and mentoring which has a causal relationship with long-term orientation and enthusiasm, commitment & respect.

Putting all of the aforementioned together, it should not come as a surprise that employees (and partners) who are long-term oriented toward big goals (vision) and are enthusiastic about and committed to their work (mission) are setting the foundation for future financial performance.

Psychological aspects of vision and mission

Psychologists attribute our experiences of positive emotions to the pursuit of meaningful goals. It isn’t the fact of attainment that brings us joy, happiness, self-esteem and other positive emotions, it is the process of pursuit. The worthier the goal, the more meaningful the process; anticipation is always more exhilarating than the event itself.

Professionals often experience anxiety caused by a multitude of factors: client issues, misunderstandings with superiors, peer tensions, missed deadlines, etc. Being anxious undermines enthusiasm and dampens the commitment required to perform well. The one thing that serves as an antidote to anxiety is the pursuit of a worthy goal; it offsets negative emotions — “Yes, we are going through a crisis right now, but our suffering is worth it.”
It’s not the attainment that makes us happy — it’s the pursuit.
Having a vision worth pursuing and a challenging mission to boot, creates a sense of meaning, fosters positive emotions and decreases negative emotions. Turns out, not only there is a correlation between financial performance of the firm and existing vision & mission, employees (and partners) in pursuit of meaningful far-reach goals feel good about doing so and have the means to offset stress.

Does this mean, though, that having a vision-mission statements plastered in all-caps in the lobby will improve financials and make employees enthusiastic?

Responsibility of communicating vision and mission

The very fact of mission statement’s or vision’s existence doesn’t account to much. Unless properly articulated, these are just vacuous proclamations. They might mean something to the leadership but usually very little to employees who, if asked, often don’t have a clue about the grand things.

Who is responsible for formulating and communicating company vision and mission, then? Surely, this responsibility is with the top management of a firm.

Formulating a vision and a mission is a first step to be taken. The second step is to articulate those ideas to the team in as a clear manner as possible. A simple employee questionnaire one month after the initial communication should reveal any potential gaps between what leadership wanted to articulate and what the team understood.
What seems self-evident to the old guard could be novel to young guns.
The final step is a continuous reiteration of the core message of firm’s vision and mission. Paraphrasing, telling relevant stories, facilitating on-topic discussions, creating themed events around mission and vision helps with cementing the idea and foundational principles of the firm. What seems self-evident to the old guard could be novel to young guns. Also, humans tend to forget things, thus regular reminders will never go amiss.

When vision and mission do and don’t make sense

It doesn’t make any sense to create a vision or a mission for any (non-professional service) company that essentially flips products in the market. The orientation is short-term and, anyway, the only truthfully communicated mission in this case would’ve been to make money.
Small firms can afford to skip vision & mission.
Small professional service firms with a couple of partners running the place can skip mission and vision too. At these firms leadership is tightly knit with the staff; employees learn the right behaviors by watching leaders work; communication is usually abundant too. It is a boon to have vision and mission statements at the outset, but since it takes up resources (time and money) to craft something meaningful and coherent, small firms can easily do without them.

At larger firms with dozens of partners and middle-level managers top leadership isn’t in constant contact with all indirect subordinates. Thus leaders have to rely on the broken telephone system; the less broken it is, the better. Vision and mission statements — clearly articulated, encoded in behavior and communicated regularly — are essential for such firms.

I will stress the main point once again: it’s not the existence of coherent mission and vision statements that matters, it is how they help shape the behavior of partners, managers and staff. If mission-vision statements aren’t used this way, they are useless.

A well-articulated, regularly reminded vision and mission serves as a filter for making decisions at all levels. Unless managers find solace in micro-management, it makes a lot of sense to provide employees with a framework for making decisions themselves.

Firms with clearly defined and espoused vision & mission have their people assembled to roll the boulder uphill, toward a common worthwhile goal, eyes fixed on a particular summit, experiencing positive emotions along the way and finding meaning in hard, at times routine, work.

Formulating coherent vision and mission statements can be rather challenging for most firms. It takes a fair amount of practice to do it right. If you’re at a point where you think this is something your firm could benefit from, consider the Core MVVP workshop. This module is full with helpful exercises and great discussion topics. It provides you with a framework, and can be customized to ensure wider participation, to get deeper in understanding firmwide values, and encourage better adoption.