MISSION STATEMENT Flashcards
define mission statement
diff between mission and vision
mission: a statement of the purpose and aim of the company
vision: describes preferred future
what is included in the mission statement
-purpose and aim
-key stakeholders
-how co is providing value to Stakeholders
-USP
-framework to evaluate current activites
benefits of mission statement
-clarity of values
-guidance in decision making
-motivation
-stakeholder communication
-strategic alignment
-long term vision
-accountability
drawbacks of mission statement
-maybe generic/ unclear/ meaningless/ cliche
-misinterpretation and misalignment by employees
-inconsistent with actions, may lose credibility and trust
-time and resources needed
-legal and ethical concerns if failed to act
what are critical success factors
‘An area where an organisation must perform well if it is to succeed.’
these are good indicators about whether co will achieve objective or not.
sources of CSF:
-industry structure
-competitive strategy
-environmental factors
-temporary factors
-functional managerial position
Performance indicators and key performance indicators
Performance indicators (or performance measures) are methods used to assess performance. For example:
-Profit
-Earnings per share
-Return on capital employed
In non-profit organisations:
-Exam grades (a school)
-Waiting times for hospital admission (a health service)
-Condition of roads (a local government highways department)
The performance indicators that measure the most important aspects of performance are the key performance indicators (KPIs).
To a large extent, KPIs measure how well CSFs are achieved
internal vs external CSFs
INTERNAL:
-Their focus is on matters within management’s control
EXTERNAL:
-outside management’s control, eg. cost, availability of raw materials
monitoring vs builing/constructing/adapting CSF
monitoring: used to see performance of their segment within the organisation. they r subject to ongoing observation and often are financial in nature eg. real vs budget. also rate of employee turnover
constructing: used for long term changes in response to surrounding environment. eg. # of successfully launched projects.
hierarchy of change
vision
mission
strategy
goals
objectives
CSF
KPIs
problems in design of performance indicators
-Not enough performance measures are set
-Too many performance indicators
-wrong performance measures
-too tight (difficult to attain then demotivated)
-too loose can pull down performance (benchmarking can help avoid this)
-hit and run performance indicators (just set then assume things will work out themselves)
framework for performance measures
-A meaningful title of the measure
-What is its purpose and how does that purpose relate to strategic success?
-What other performance measures might be affected by this one, how are they affected and how are conflicts to be resolved?
-Who will be held responsible for it?
-What is the source data, who is responsible for its supply, how is it measured and how is the measure calculated?
-What investigations and explanations are required and who is responsible?
-What target is set and how has that target been determined?
-How often should the target be updated?
-How often is the measure reported on?
-Reporting and action?
The Fitzgerald and Moon model
explicitly links performance measures to the individuals responsible for the performance.
The model first sets out the dimensions (split into results and determinants) where key performance indicators should be established. You will see there is a mix of financial and non-financial, and both quantitative and qualitative:
Results
Financial performance
Competitive performance
Determinants
Quality
Flexibility
Resource utilisation
Innovation
The model then suggests standards for KPIs:
Ownership: refers to the idea that KPIs will be taken more seriously if staff have a say in setting targets. Staff will be more committed and will better understand why that KPI is needed.
Achievability: if KPIs are frequently and obviously not achievable then motivation is harmed. Why would staff put in extra effort to try to achieve a target (and bonus) if they believe failure is inevitable.
Fairness: everyone should be set similarly challenging objectives and it is essential that allowance should be made for uncontrollable events. Managers should not be penalised for events that are completely outside everyone’s control (for example, a natural disaster) or which is someone else’s fault.
The model then suggests how employee rewards should be set up to encourage employees to achieve the KPI targets:
Clarity: exactly how does performance translate into a reward?
Motivation: the reward must be both desirable and must be perceived as achievable if it is to be motivating.
Controllable: achievement of the KPI giving rise to the reward should be something the manager can influence and control.
