5 accountability pitfalls that kill companies

Flickr user Chris Owens

(MoneyWatch) COMMENTARY President Obama's "If you've got a business, you didn't build that" speech hasn't just created a firestorm of political debate. It's got a lot of business people shaking their heads, as well. And that includes me.

While I understand what the president was trying to get at, the fundamental problem with his logic is that it flies in the face of one of the most important management concepts: accountability. When people are held accountable -- to themselves and their stakeholders -- things get done. Good things.

Actually, the speech does a pretty good job of explaining how accountability works, if you just reverse the cause and effect. You see, when people take risks and hold themselves accountable for the outcome, as our founding fathers did, that's what built "this unbelievable American system," to use the president's words.

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Granted, that system does now exist, but only through the continuous replication of the concept of personal initiative and accountability. It's not the other way around. The founding fathers were entrepreneurs and innovators in every sense of the way we think of those words today. Had they not been, we wouldn't have this great system.

President Obama was certainly right about one thing. There are a lot of smart and hardworking people out there. And one of the best ways I know of to differentiate and ensure successful outcomes in business is to create solid accountability mechanisms.

Here are the top five "accountability" pitfalls that business leaders and executives typically fall into, in my experience. Some of them don't even appear to be accountability-related on the surface, which is why they're so insidious. If you want a high-performance management team, make sure you avoid them:

Unclear responsibility. This is probably the most common pitfall. Show me an organization and I'll show you managers with misaligned goals and vague responsibility. Two people shouldn't have the same functional responsibility or own the same goal. If you do that, you're asking for things to fall in the crack. That doesn't preclude "matrix" management; the trick is to ensure goals and responsibilities are properly aligned. It can be done.

No follow up. This is practically an epidemic in organizations. Executives are great at coming up with goals, strategies, even metrics. Unfortunately, they're also notoriously bad at following up. I don't care how driven and entrepreneurial executives are; without follow up, nothing good happens. Companies must have a relatively objective and, sorry to say this, strict process for both setting and scoring management performance metrics.

Compensation plans that reward poor performance. Closely related to the "no follow up" problem, most companies have terrible executive compensation plans. Maybe 1 in 10 actually rewards the right behavior and has enough teeth to foster accountability. The problem? The bar for making gobs of money is set too low, and there's not enough difference between success and failure, plain and simple.

Management behavior. When it comes to management behavior, most executives and boards just look the other way. That lack of accountability plays a key role in business failures because dysfunctional leadership results in bad strategic decision-making and poor employee performance and execution. Granted, coming up with metrics for this sort of thing is challenging, but I think "360s" are pretty effective.

Flawed corporate strategy. This is rarely seen as an accountability problem, but it is. When company executives push a flawed strategy, two things inevitably happen. First, smart people in the organization call them on it -- publicly or privately -- word gets around, and management credibility suffers, big-time. Second, folks will start covering their behinds, pointing fingers, acting passive aggressively -- all sorts of dysfunctional behavior that wreaks havoc with organizational performance.

Not surprisingly, I find that executive management teams at consistently successful companies make accountability a priority and, therefore, avoid these pitfalls. It take a real commitment of precious management time and resources. But not only is the payoff worth it, it's a necessity in our hypercompetitive business world.

Image courtesy of Flickr user Chris Owens

[Al Watts]

Another good one, Steve - although I have a take on Obama's comments.

Back to accountability, another common cause of poor accountability is too many priorities - a combination of not being realistic and inability to focus. I always liked "OZ's" take on responsibility, accountability's cousin: it's about "seeing it, owning it, solving it and doing it."

I see stewardship as another "cousin" of accountability, including accountability for the impact of decisions and actions not within our immediate sphere of responsibility. That includes, for example, accountability for environmental impact of upstream product components and downstream impact of product use.

I elaborate on these points in the "Accountability" chapter of http://www.integro-inc.com/About/Navigating_Integrity_Book

[feralferal]

Great article, Steve. And the storm over the president's speech does provide a good, topical lead-in for your points. But I am surprised that you're taken in by, and repeating, the GOP/Faux News selective editing of Obama's speech.

It's quite clear -- where context hasn't been deliberately omitted -- that he said business owners didn't build the roads and bridges that enable their success.

You may want to consider the accounatibility issues for business owners who are using their profits to purchase politicians who will help them dodge their responsibility for helping to pay for those roads and bridges. Not to mention those using off-shore accounts to do so.

Doesn't the fact that business owners (or anyone) can secretly donate billions to advertise on behalf of a candidate (and, along the way, endlessly repeat distortions of others' words -- until even smart business columnists buy the lie) make a complete mockery of political accountability?

[stobak2]

I actually used the transcript from whitehouse.gov for this article. Moreover, the blog is entirely reflective of my views and based on my observations, experience and the exceedingly rare insight.

ST

[feralferal]

Great article, Steve. And the storm over the president's speech does provide a good, topical lead-in for your points. But I am surprised that you're taken in by, and repeating, the GOP/Faux News selective editing of Obama's speech.

It's quite clear -- where context hasn't been deliberately omitted -- that he said business owners didn't build the roads and bridges that enable their success.

You may want to consider the accounatibility issues for business owners who are using their profits to purchase politicians who will help them dodge their responsibility for helping to pay for those roads and bridges. Not to mention those using off-shore accounts to do so.

Doesn't the fact that business owners (or anyone) can secretly donate billions to advertise on behalf of a candidate (and, along the way, endlessly repeat distortions of others' words -- until even smart business columnists buy the lie) make a complete mockery of political accountability?

[feralferal]

Great article, Steve. And the storm over the president's speech does provide a good, topical lead-in for your points. But I am surprised that you're taken in by, and repeating, the GOP/Faux News selective editing of Obama's speech.

It's quite clear -- where context hasn't been deliberately omitted -- that he said business owners didn't build the roads and bridges that enable their success.

You may want to consider the accounatibility issues for business owners who are using their profits to purchase politicians who will help them dodge their responsibility for helping to pay for those roads and bridges. Not to mention those using off-shore accounts to do so.

Doesn't the fact that business owners (or anyone) can secretly donate billions to advertise on behalf of a candidate (and, along the way, endlessly repeat distortions of others' words -- until even smart business columnists buy the lie) make a complete mockery of political accountability?

[AllesK]

Ugh! If the President walked on water you'd write an article about who he couldn't swim.

His point, which you managed to miss, was that you didn't build it alone. You used as a springboard into accountability instead of one on consensus. We have to work with our business partners to achieve the company's goals. This is the whole basis of 6 Sigma -- that we're all responsible.

It's curious that when you were writing during the Bush Administration you didn't find a way to denigrate him in every article.

[stobak2]

As I said, I understand what he was getting at but I'll say this just one more time, since "you managed to miss" it: He has the cause and effect backwards and that's the key point. We have "this amazing American system" because our founding fathers were entrepreneurs and innovators, it's not the other way around.

"denigrate him in every article" -- you may be exaggerating just a bit, there.

ST

[ENetArch]

While accountability is an important aspect in doing business, not only C2B or B2B, but also internal business customers. Where does accountability play in a failed understanding or communication of the business problem?

However, how long will a company last when their mission and vision statements are not based on resolving a business problem? I've seen important decisions concerning around the business problem suddenly get lost as department leaders squabble over budgets on a dying products line due to changing markets. At this point, individuals cannot make informed decisions or resolve conflicts independent of leadership based on logic that begins from the business problem.

Is this still a lack of accountability? Or is this due to a failed understanding of how the business problem drives the company, drives every decision being made, and provides the glue that determines product inclusion or exclusion?

[alstewart72]

Accountability is extremely important and a necessity in business. The reality is that accountability is a two-way street as pointed out in the article. It is not just something that is applied when things are going wrong but it must also have applications when things are going right.
Flawed Business Strategy is definitely a company killer.

[Michael_Trow]

Excellent article! Accountability is such an important characteristic to be aware of at the very least. I help small businesses increase sales and emphasize the importance of accountability daily (www.michaeltrow.com).
I can see how 'unclear responsibilities' is the most common pitfall. It may be possible to suggest that there is also a lack of desire to be accountable for many of those that need to be.