Introduction
Mission statements are a staple of corporate strategy. They’re carefully crafted, consultant-polished, and plastered across websites, boardrooms, and slide decks. Many executives consider them foundational to strategic alignment. Surveys show that companies spend thousands to tens of thousands of dollars (and weeks of leadership time) shaping their mission statements, often with the help of pricey consultants.
But here’s the uncomfortable truth: an empirical comparison of different elements of mission statements shows they have zero impact on financial performance. A 2002 study of middle and senior managers found that although most firms (82%) had a mission statement, less than half (40%) of the managers felt that the mission statement accurately reflected the organization. 1
Despite all the effort, it turns out mission statements are more style than substance—at least when it comes to critical financial outcomes: Return on Assets (ROA) and Return on Sales (ROS).
Study
- Sample: 56 of the largest firms from the U.S., Europe, and Japan
- Sample Size: Mission statements from each company were coded and analyzed
- Components of Mission Statements: The researchers rated each mission statement based on the presence or absence of 17 different components. They were based on three different categories as shown below:
- Stakeholders mentioned (e.g., employees, society, customers)
- Components included (e.g., values, financial goals, geographic scope)
- Objectives met (e.g., direction-setting, decision-support, motivation)
The higher number of objectives included was seen as a measure of quality.
- Financial Measures (Outcome): ROA and ROS from public databases
- Method: The study calculated the number of objectives included in the mission statement with the financial metrics.
What the Study Showed
The authors conducted two separate analyses.
First, they compared statements with the presence or absence of each of the 17 elements on the financial metrics. Presumably, firms would have higher ROA / ROS if a specific mission statement element was present in their statement. Of the 17 elements, there were no differences for 13, suggesting the vast majority of elements have no impact on the mission statement’s quality. As examples:
- Inclusion or exclusion of customers, investors, suppliers did not differentiate high performing and low performing companies.
- Inclusion or exclusion of financial objectives, industry, motivation for excellence, societal benefits, competency, or future orientation did not affect financial performance.
- The only three elements that differentiated financial performance were employees, society, and values.
Second, they calculated the correlation of the inclusion of different elements in each mission statement with firm performance. Results are summarized below:
Figure 1: Percent of Companies Stating They Screen Candidates by GPA
Based on these results, the authors stated in the paper’s abstract that “most elements in mission statements are not associated with firm performance” (page 86). Their conclusion stated:
The literature is rich with arguments about the purpose of mission statements and the elements (stakeholders, components, objectives) that ‘‘should’’ be included. Considering that most of the recommended elements have little to no impact on financial performance, the question then becomes, why is it considered essential (or, at least important) … to include all four in a mission statement. The findings in this study cast doubt on the notion that firms should develop comprehensive mission statements that mention all stakeholders and include multiple components and meet specific objectives in the hope that it will somehow impact financial performance. Perhaps some of these elements do not help the firm’s bottom line because they don’t accurately describe the company or its goals.
Key Takeaways for CEOs
- Mission Statements Don’t Drive Results: The data are clear – most mission statement elements have no measurable impact on financial performance. They’re more corporate wallpaper than strategic lever.
- Internally Focused and Out of Touch: Most mission statements focus on internal values, vague aspirations, or generic goals. They rarely address actual stakeholders that matter to customers and shareholders in any concrete way.
- A Legacy Ritual with No ROI or ROS: Mission statements are relics of old-school strategy processes. Companies spend real time, money, and leadership energy on drafting them—with no evidence of any payoff.
- They Suck Up Resources and Create Strategic Clutter: Every hour spent wordsmithing a mission statement is an hour not spent on real work. Worse, they often create noise: abstract ideals that distract teams from clear, actionable priorities.
Despite the evidence, if you feel compelled to create a mission statement, focus it on employees and society. These elements showed a slight performance relationship. Even here, firms should use statistical analysis to develop value equations for employees or society.
The next time a strategy consultant tells you to create a mission statement, ask them: “what’s your evidence that it will improve our financial performance?”
If their entire claim is based on a few unsubstantiated quotes from executives, or salience-based stories, don’t bet your company’s strategy process on that consultant.
Citation
Bartkus, B., Glassman, M., & McAfee, B. (2006), “Mission Statement Quality and Financial Performance,” European Management Journal, 24(1), 86–94. https://doi.org/10.1016/j.emj.2005.12.010