Posted on Sept. 24: Company directors not involved enough in mission development, study finds

[img_inline align=”right” src=”http://padnws01.mcmaster.ca/images/chris_bart_opt.jpg” caption=”Chris Bart”]Company directors aren't involved enough in the creation and implementation of a company's mission statement, a new study suggests.

McMaster University business professors Chris Bart and Nick Bontis found that being aware of a company's mission is important for both directors and senior management but the impact of their involvement is not identical.

They surveyed senior managers from 1,000 large Canadian and U.S. organizations. They examined the relationships among a board and management's involvement in developing their company's mission, their current awareness of the mission, employee commitment to the mission company-wide and the company's performance.

Their findings, based on 339 responses, are published in the article “Distinguishing between the board and management in company mission: implications for corporate governance” in the September issue of the Journal of Intellectual Capital.

The researchers found that on average, board members scored lower than their management counterparts in both awareness of their company's mission and their involvement in developing and implementing it. More specifically, the study showed that while 80 per cent of the respondents reported that their senior management was highly involved in developing their organization's mission, only 47 per cent claimed this to be the case for the board.

“This study emphasizes that directors' involvement in developing a company's mission is a much more important element to an organization's success than has been previously recognized,” said Chris Bart, business policy professor at McMaster University's Michael G. DeGroote School of Business. “We now have a genuine 'best practice' that goes contrary to the traditional thinking that many corporate directors have about board involvement in company mission. And it represents a major reversal in corporate governance thinking as far as who does what in developing a company's mission.”

Moreover, boards of directors need to be actively involved in developing and championing company mission statements if firms hope to convince employees and customers they mean business. This approach is contrary to the long-established practice where directors simply approve a mission statement developed by a firm's senior managers, Bart said.

The study also found that the traditional method of communicating a mission statement, through an annual report, was far less effective than using company information kits, newsletters and other internal documents. Bart and Bontis suggest that various communication techniques and repetition need to be used to ensure mission statements are conveyed effectively.

Photo caption: Chris Bart, business policy professor at McMaster.