In this video tutorial, accounting professors Jim and Kay Stice explain the importance of a company's mission statement and how it relates to accounting, balanced scorecards, and key performance indicators, or KPIs. They indicate a mission statement should make clear what the organization will and will not do.
- We have both been visiting faculty members at INSEAD Premier European business school. - Yes, we have in fact we have taught courses at both their Fontainebleau campus not far from Paris. And their Singapore campus, the students call these two campuses fonte and signi. - And in one of the INSEAD classrooms one day I noticed the following words in a plaque, posted on a wall. Quote, "Our values: Diversity as a source of learning and enrichment. We are free from ant dominant culture or prevalent dogma; we are open to, and respectful of, other views; we learn through the exchange of ideas and experiences." Close quote.
- Yes, this is part of INSEAD's mission statement. - Now you and I have both seen lots of mission statements over the years, there's a tendency I think for mission statements to be vague. - Exactly, my criterion for evaluating a mission statement is as follows. Does the statement make clear what the organization will not do? - Is very easy when making a mission statement to promise the sun the moon and the stars. We will do everything, but a mission statement that promises everything really doesn't give an organization any guidance in how to direct it's scarce resources.
And the scarce time of it's people. Now we should make clear how all of this relates to accounting, balanced scorecards and key performance indicators or kpi's. - Well let's look back at the statement from INSEAD . Diversity as a source of learning and enrichment. Now when you were teaching at INSEAD did you notice any additional diversity in the students compared to the other places you've taught? - Yeah, the diversity of the INSEAD student body is amazing. You can look down the row and see students from Germany and Africa, and South America. And China, the Middle East, and North America all sitting together.
Working in group projects and socializing. It's really a powerful sight. - Now that brings us back to accounting, such diversity doesn't happen just by accident. It must be the case the INSEAD very carefully notes the national origin of each applicant. And monitors the mix of the class as students are admitted. - They must have measures in place to ensure that the class isn't heavily weighted. Too much towards Europeans, or North Americans. So they would track key performance indicators, such as the number of North Americans admitted. Or the number of people from the Middle East admitted.
That influences the admission process. - These numbers, these measures, these key performance indicators. Those are what put the meat on the bones of the general mission statement, diversity as a source of learning and enrichment.
In this course, accounting professors Jim and Kay Stice explain what KPIs your business should consider in a balanced scorecard, from financial goals to employee and customer satisfaction. They describe how to craft a clear mission statement that complements your KPIs, and how to tie performance to incentives. Plus, get a look at KPIs in action, as Jim and Kay break down a case study examining a trucking company's balanced scorecard.
- The importance of KPIs and measuring performance
- Financial goals and measure
- Customer needs and satisfaction
- Employee growth
- Creating an effective mission statement
- Linking measurements and rewards
- Examining a KPI case study