The accountability dilemma

The accountability dilemma

“Everyone is accountable for corporate results” is a stock phrase that we hear too often these days.

The idea that every worker from his/her desk or workstation is accountable for corporate results is a false concept that has been cemented by scorecard models that link financial results to the work of departments, even individuals. Reality is very different.

There are two species in the corporate world. On one hand we have executives, who dwell in the upper levels and are accountable for defining corporate strategy. They are the ones that decide what to do, and what not to do based on, you would hope, an accurate reading of their industry and the economic and political environment. Strategy, if well defined, should clearly identify where the organization needs to get different results, and how different results will be achieved. Strategy is not always this clear, but this is the topic of a separate posting.

The other species, the mortals, are accountable for making sure that the changes defined from above are implemented. They do this through programs and projects, operational efficiencies and all kinds of initiatives. Success for the mortals, should be measured by the achievement of the targets for change set by the executives. If targets are met, this doesn’t necessarily mean that there is a party at Mount Olympus. The cause-effect relationship between the defined changes and the financial results of increase in revenue, reduction in costs and improvement in profits is, in essence, the strategy. If financials are good, this at least proves that the strategy was not wrong. Good financials could be a result of a favourable economy, a competitor going under or a booming market. Conversely, if the internal targets were met and the financials are not there, the accountability clearly falls on the executives. They are the ones who should be capable of reading the signs on the heavens, which is why they are paid as they are, and if they are good at what they do they are worth every penny.

In conclusion, accountability is not a continuum that goes from the top executives to the desk of everyone in the company. It has two defined sections that correspond to strategy formulation and strategy execution. The link between those sections are clear and measurable business outcomes.

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