How the confusion over definitions may be causing you to lose revenue
Don’t worry, this is not an English essay, but it is a business lesson worth noting. Let’s start by asking a simple question, what do you really mean in your business when you make someone accountable, assign responsibility or give authority?
The confusion over these terms has been proven to be damaging to business. It is how problems fail to be identified, acted on or resolved and, ultimately, how revenue is lost.
Understanding these terms and their effect on business performance is integral to productivity, individual and team performance and business growth. So let’s break it down and look at the definitions.
Accountability is where the buck stops. Simply put, for every role, function or process, there should be one person who is accountable.
This is why accountability can’t be shared, because people will assume someone else is keeping track, when in reality, no-one is keeping track.
Better Faster Cheaper
Accountability keeps your business running smoothly and clarifies the people who are accountable for scaling the business. It is linked to the key internal processes and functions that drive your business.
By identifying one role in your business that is accountable for each of your critical business processes, you can keep track of business performance and make changes to run your business better, faster and cheaper.
Real Business Examples
- The Head of Sales and Marketing is accountable for the sales process and the marketing process.
- The Sales Manager is accountable for gross profit.
- The Marketing Manager is accountable for number of leads generated per week/month.
- The Head of Operations is accountable for the logistics process.
- The logistics manager is accountable for the number of stock days per sku.
- A store person is accountable for being on time every day plus 99.5% non-picking errors.
Benefits For All
Accountable KPI’s should exist in every role. Keeping team members accountable with clear KPIs gives certainty for the expectations of their role.
Accountability also gives clear lines of communication for staff when things are not working. This means problems are identified, shared and resolved more quickly. When it is clear who to approach with issues, other staff are not dragged into or distracted by problems they cannot resolve. This in turn keeps everyone focused on their own work and increases productivity.
Clear accountability is how good companies run well, achieve goals, gain efficiencies and keep their people happy.
Responsibility falls to anyone with the “ability to respond”. It includes everyone involved in a particular process or issue. Giving someone responsibility for a task, process or service means it is the role of that person to do the task.
To take this one step further, responsibility is not just about the tasks assigned to someone, it’s about the standard to which they are delivered. So, with responsibility comes expectation. For example, it is the responsibility of all staff to uphold the reputation of the company, but there is also an expectation around how and to what extent this is achieved. It is not enough to simply memorise the corporate values. Staff are expected to live them.
This lies with the person or team who has the final decision-making power. Problems arise when authority is not assigned clearly, which can make decision-making difficult and cause frustration and unnecessary obstacles.
Think of it this way: a CFO has accountability for cash – they literally “count” and report to the team daily. And they are accountable for alerting the team if they sense any potential issues now or later in the year. In turn, the CEO, maintains the authority over cash, signing off on major expenditure and investments. All staff have responsibility for making sure that cash is spent wisely and that deals and contracts are structured so they help generate cash as the business scales.
Throughout the different levels of an organisation, the balance between authority and accountability shifts. For frontline staff, a level of authority may be required for them to be accountable. However, in the upper levels of an organisation, management staff often find they are taking on increasing accountability for things they have less and less control over.
Business leaders are successful when they bridge the gap between accountability and authority with communication, education and vision.
Scaling Up Success
In an effective, successful and well-positioned business, everyone is responsible for their assigned tasks, but only one person is accountable for the results or progress of those tasks, and only specific, clearly-identified people have the authority to make decisions around these tasks.
So why are so many companies in NZ and abroad getting it wrong? It’s because not enough attention is paid to the details.
Clearly defining what each person is responsible and accountable for, and has authority over, is critical. They are not just words, they have meanings attached and it’s crucial to get those meanings right for your business to scale-up and succeed.
Tools for Business Leaders
In his best-selling book, Mastering the Rockefeller Habits 2.0: Scaling Up, Verne Harnish, Founder and CEO of Gazelles International, says, “If more than one person is accountable, then no one is accountable, and that’s when things fall through the cracks.”
If you are struggling with achieving clear accountability in your company, we can help you achieve organisational-wide accountability using the proven Scaling Up framework and internationally proven business tools such as the Function Accountability Chart (FACe) and Process Accountability Chart (PACe).