Sep 23, 2021 | Governance, Leadership, Management
‘How can I be held responsible when I do not have the authority’?
Anyone in a management role has probably heard, and perhaps asked that question after some ‘do-do’ hits the fan.
‘Accountability’, ‘Responsibility’, and ‘Authority’ often become entangled in ways that leave management, improvement, and scaling of any set of activities challenging. The lines become blurred and ambiguous, which enables problems to be shovelled into a quiet corner, unresolved.
As with any process, ensuring shared clarity, transparency and understanding is the only way to improve.
The absence of such shared understanding means a problem will always be someone else’s. ‘Not my job‘ in the vernacular.
Following are my definitions, which may clear up the differences.
Accountability
Accountability means that someone is specifically held accountable for the activity or set of activities. That person is accountable to track the progress of the activity, process, function, whatever it may be, and give it a ‘voice’. If you cannot nominate one person who is specifically accountable, it will fall through the cracks.
Responsibility
Responsibility falls to anyone who has the ability and opportunity to respond proactively support an activity or process. Anyone who ‘touches’ a process has responsibility to do their best to ensure that the activity progresses as expected, and to remove any hinderances they may see. This is decision making at the ‘coal-face’, taking responsibility for outcomes.
Authority
Authority belongs to the person with the final veto power. There is always someone who has that final say. The larger the organisation, the further away from the day-to-day operational decisions that person is likely to be. Conversely, the bigger the decision, the closer they will be.
The processes and boundaries that determine the point at which a decision can be made will be an explicit outcome of the descriptions of each role, and the culture of the enterprise.
The differences between the meaning of these three words offers a huge expanse of quicksand, in which many people and organisations get stuck.
For example, in a previous life as GM of a large organisation, I had final authority over the expenditure of marketing budgets. The marketing manager had accountability for the development of marketing plans and their implementation across the functions in the business, and the authority to make relevant decisions within the marketing function. Product managers had accountability for the specific activities that took place in their brand portfolios. Operations management had responsibility to ensure that the products produced were up to specification, and when that was not the case, the authority to rework or dump as appropriate. Logistics management had the responsibility to ensure orders were filled on time and in full, and the authority to make decisions to ensure that was the case. We all had a shared responsibility to ensure that the customers who bought our products were serviced in a manner that had them coming back for more.
Back to the question asked at the top: ‘How can I be held responsible without the authority’. The answer is: ‘it depends’.
Everyone has the responsibility to manage their own activities on a daily basis, and be held accountable for the outcomes, but as you move up a corporate ladder, it becomes increasingly challenging to maintain the direct link. The more senior you are, the more you will be held accountable for things over which you have less and less direct control. That direct control is held at lower levels in the organisation.
The key to making this all work is to thoughtfully, consistently, and transparently delegate the authority to make the veto decisions, both Yes and No, as far down the organisation chart as possible. Counter intuitive as this may be to many, offering people control over their defined workspace and span of control, leads to quicker and more informed decision making. It also assumes that everyone understands the differences between these three words, and that there is consistent and explicit feedback on both the outcomes of decisions, and the manner in which they were arrived at and implemented. This requires that you pinpoint the job to be done, have a system of interlinking KPI’s, and that there is explicit and transparent performance feedback and management of both the process and those held accountable for the components of the process.
It also relies on having the best people in the right spots, willing and able to make the decisions necessary, at the right time. Of all the challenges faced by those at the top of an organisation, having the best people in the right spots to deal with the challenge of building commercial sustainability, is the most challenging of all.
Header cartoon credit: Scott Adams and Dilbert, again make the point.
Note: I realised after publishing that I had dealt with with this exact question previously in a post back in 2019. Fortunately, while the wording is different, the meanings ascribed to the three key words are identical. After 2000 plus posts, this accidental doubling up does happen occasionally. Perhaps it is a measure of importance?
Sep 3, 2021 | Governance, Strategy
The first is to have a monopoly, preferably a regulated one, such as a public asset that has been privatised.
Sydney’s Kingsford Smith airport was flogged off by the government to a private operator who makes obscene profits, not just from the landing rights, but parking, retail concessions, and every other opportunity to gouge. What are your options… catch a train to Singapore?
The second is to be in a market where the person shelling out the money for your product is not the decision maker in the purchase.
My dog does not care how much the food I deliver to her/him costs, the marketer is selling the stuff to me on the basis that my dog will prefer it, and it is better for them, and I am a bad person if I deprive my beloved pet of the best care possible.
The Australian publicly funded pharmaceutical benefits scheme is similar.
Once on the list, the pharma companies sell to the doctors, persuade them to prescribe their magic to their patients, who pay a consistent subsidised cost whatever the price of the drug to the public purse. Perhaps inconsistently, I am in favor of this scheme, despite the obvious rorting that goes on.
I am always caught between amazed laughter and despair when I hear a politician whining about the prices of some commodity, the ownership of which they have flogged off to private enterprise, who then proceeds to make a profit, because they can.
Just look at what has happened to power prices since the privatisation of the poles and wires, done in a strategic vacuum for short term political gain.
No matter the words used, what they have done is subsidise private profit from the public purse.
One that should get a mention but does not despite the disruption over the last couple of years is the takeover of Healthscope, the operator of the new French’s Forest hospital in Sydney’s north, by Canadian group, Brookfield in June 2019. Brookfield held a featured place in the Panama and Paradise papers as protagonists in tax avoidance via trusts located in tax havens.
The state government poured 2 billion dollars into the hospital in a so called partnership with Healthscope previously an ASX listed company, and closed the alternatives in the area, Mona Vale and Manly hospitals.
So much for the competition, and for the tax on the resulting profits.
Sep 1, 2021 | Collaboration, Governance
Trust in our institutions is generally accepted as being on a slippery slide to zilch. I am certainly one who has loudly carried that message.
It is easy to say, but what are the essential elements of trust amongst a group?
If you look up the wisdom of Dr. Google, you will see a library of articles, posts and opinion that varies in the words used, but when boiled down, are saying pretty much the same 7 things.
Trust that others have your back. When things go wrong, you will not be left to carry the burden yourself.
Trust in common values and objectives. This implies that the values and objectives are an outcome of the group, rather than having them imposed on the group. Objectives and values can be superficially common, as in a group put together for some specific task. However, those objectives and values will not necessarily be shared, which comes from the interactions of the group with each other over time.
Trust that we will keep each other’s confidences. Inability to keep confidences indicates a lack of integrity, poison to any level of trust.
Trust in our willingness to learn from each other. This is a two way street, and is not driven by artificial hierarchy such as position on the organisation chart.
Trust that people will do as they say they will do. No further explanation required.
Trust that we are free to express our views and ideas. Often, we refer to ‘psychological safety’ as if it were a fence constructed in some way to keep the nasties out. However, it is a fence only in our individual and collective minds, but is critical to building relationships.
Trust that we are able to be critical without being personal. We need to be able to be tough on our friends, without damaging the foundations of friendship and respect. Commonly I refer to this as ‘transparency’. It is not inconsistent with the requirement to be sure that confidences will be kept, it is more a foundation that enables those critical confidences to be shared and kept. Nothing is as corrosive as uncertainty, whether it be about your performance of a task, or how long it will take for the taxi to get to you.
In an HBR article from February 2019, the authors cited three elements a leader must have to hold the trust of those for whom he/she is responsible:
Positive relationships. Meaning a leader must demonstrate empathy, balance results with concern for people, resolve conflict as it occurs, and deliver honest and helpful feedback.
Good judgement and Expertise. People being led will be willingly led, as distinct from managed by someone who demonstrates good and consistent judgement in decision making, seeks and absorbs the opinions of others, and has the expertise relevant to the task.
Consistency. This is simply walking the talk, following through, setting a good example, and being prepared to do what is necessary.
To my mind, the 7 elements cited above contain these three, with a perspective that is a bit closer to the sorts of situations individuals find themselves in over the course of time. They are more specific, less generic than the three cited in the HBR article.
I recently heard a definition of the point at which you have a ‘group’ that is more than an assembly of people looking to achieve a defined outcome, which I like:
“A group is when you do not need to look around to know everyone is doing the right thing, but you do look around to see that everyone is OK’
Cartoon header courtesy www.gapinvoid.com
Aug 23, 2021 | Governance, Leadership, Personal Rant
The Prime Minsters performance on ‘Insiders’ yesterday reminded me of Erwin Schrodinger’s cat thought experiment.
This was an absurd illustration of wave function collapse, a characteristic of quantum mechanics. (Note: I understand absolutely nothing about quantum). It proposes that the imaginary cat can be both alive and dead at the same time. Clearly a challenging situation, for the cat at least. Dead but not dead, perhaps just not buried yet?
It also seems to represent the Morrison governments chattering about climate change, and the choices that are needed, and not needed, all at the same time, amongst several other important questions.
As with Quantum, I fail to understand the half in the box and half out of the box ambiguity that is presented by those supposed to be making the tough choices on our behalf, and then acting on them.
Perhaps they are acting and not acting at the same time as well, and perhaps acting, taken in the context of performing rather than taking action is appropriate.
The resurrection of Barnaby Joyce to the exalted role of Deputy PM may be another kitty both in and out of the box. It seems to depend on whether he is berating the Labor party (who have their own litter of pussie-cats hidden away, unseen in the box) for some infraction of his imaginary rules, or defending George Christianson’s right to blather nonsense in the federal parliament.
I guess George does have the right to blather nonsense in parliament, he had a solid majority in his electorate at the last election, so some must think he is on the money, but the Nats also have the right to kick him out of their box. Label him clearly as a dead cat! Problem of course that they want to hold the seat, so he must remain alive as well, at least until they can find some alternative feline just as screwy to replace him at the next election.
This is a ‘Schrodinger Government’ both dead and not dead at the same time. Disturbing to see them still stumbling around blathering.
The pussy is also busily clawing at the response/non-response to the question of enabling businesses making covid vaccination mandatory. They are hoping business will do their job for them, again, and carry the risk of legal action brought under the provisions of an act clearly not reflecting the current need.
That comes on top of the narrative happening in Kabul. The PM blathered yesterday about how hard the government has worked to get out those who helped us in the 20 years of slog, and how honourable the sacrifices made by our armed forces. The fast words delivered with the conviction of a snake-oil salesman will carry little weight at all to the families of the 41 killed, and 249 injured, and those we leave behind in that sad place.
At least the chronic decision making vacillation and teflonesque reflex to dodge outcomes is consistent!
Header cartoon courtesy www.howstuffworks.com
Jul 30, 2021 | Governance, Innovation, Strategy
The old saying that ‘he who pays the piper calls the tune‘ is almost always true.
The piper in this case has been the orthodoxy prevailing over the past 40 years in Australian manufacturing.
I have been actively observing the trend towards outsourcing for a long time, deeply concerned that as a country we were collectively making a huge mistake, by focussing on lowering costs by outsourcing. By slicing off the things that are not deemed to be ‘core’ in some way to your profitability, you can reduce costs while maintaining revenue.
I guess it is much easier than being truly creative, taking risks, betting on a future different to the present.
As a result, manufacturing businesses in this country have progressively outsourced manufacture of sub-components, then whole components, then manufacture and assembly of finished products, and finally, because the manufacturers in China, Vietnam, or Thailand are closer to the technology, the design.
All Australian manufacturers, those few that have survived so far, are left with is a brand, with nothing to support it.
A brand without the supporting ‘brand infrastructure’ is a bit like a heavily inflated balloon. At some point a bugger with a pin will come along and, ‘bang’, you have nothing left.
The bugger with the pin proved to be a virus.
Supply chains have been ‘kneecapped’ and there is suddenly a recognition of the need for ‘sovereign manufacturing’.
Being driven by short term profit at the expense of long-term commercial sustainability has been a dumb choice.
I understand how it has happened.
Along with outsourcing manufacturing, we outsourced good old common sense to the educated but inexperienced crowd who applied IRR (Internal rate of return) and RONA (return on net assets) models shoved down their throats in MBA classes. These led to incremental investments in little, short term things at the expense of longer term and less certain but potentially bigger returns, to satisfy IRR hurdles. Reductions in the denominator in ROI calculations by flogging off productive assets made them look good by increasing RONA numbers.
They forgot that cash, and intellectual capital are not ratios, you either have them or you do not. Without cash you will be dead tomorrow, without the intellectual capital underpinning operations, you will be dead by a slower route, but just as dead.
Covid has awakened us to the effects of those decisions made over an extended period. Question is, do we have the resources and resolve left to start playing a different tune, one that common sense rather than capital ratios dictates?
I truly hope so for the sake of my grandchildren.
Header cartoon courtesy www.Gapingvoid.com
Jul 7, 2021 | Governance, Management
Small and medium businesses have many advantages over their larger rivals. They also have many disadvantages, which centre around the more limited resources they have to get the job done.
One of those disadvantages rarely spoken about, but sadly, present too often, is the lack of robust book-keeping procedures, which can and too often does, enable fraud.
This comes usually from the lack of internal controls, coupled with the ‘all hands in’ necessity of SME’s which means basic financial security measures are curtailed. For example, the recording of both debtors and creditors is in the hands of one person, or even simpler, there is little scrutiny on such items as credit card usage.
The propensity for fraud, and/or misleading financial reports and results can be looked at in a similar manner to fire.
For fire to occur, there needs to be 3 things in place. Fuel, oxygen, and heat. Take away any one of these 3 factors and fire cannot occur. If there is no fuel, it will not burn. Take away oxygen by covering the fire with water, or a fireproof sheet, and it will not burn, take away the heat source, and the fire cannot start.
It is the same in finance.
The 3 factors are opportunity, pressure, and rationalisation.
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- Pressure. For an individual to perpetrate a fraud, there must be some pressure for them to do so. Some situation in their lives that makes them take what they know is a risk creates the pressure to take that step. Debt, divorce, a burning desire to own something they cannot afford, and so on. Then there are a few who are just opportunistic, and when the opportunity arises, will leverage it.
- Rationalisation. The individual must be able to rationalise the fraud, stealing by another name, in some way. They need the money more than the company, nobody will notice a bit going missing every month, ‘I have been underpaid for the value I add’ and so on.
- Opportunity. There must also be the opportunity for the fraud to be perpetrated. The easiest way is to gain access to cash before it is counted, as in retail environments, but the lack of controls in a bookkeeping function or warehouse can have the same impact. I have seen payments clerks set up an account for a phony supplier, generate invoices from that phony, and pay them. I have also seen an order for 10 pallets have 11 pallets loaded onto a truck for delivery and the extra pallet not accounted for. This may not be financial fraud, it is stealing, and the effect is the same. Involving more than one person to perpetrate a fraud makes many types more possible, while at the same time, offering greater detection opportunity.
Remove any one of the 3, and fraud is far harder. Not impossible, but harder.
There are many simple things that management of any enterprise can do to minimise the occurrence of fraud in their business.
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- Separate the recording from the physical. The obvious example of this is the use of a till in retail that records the products and amounts bought, which then must be reconciled with the actuals in the cash drawer. This also records the products being sold which can be reconciled with stock records in a stocktake, further eliminating a source of opportunity.
- Separate the two sides of a transaction or create transactions as a data collection point. For example, the separation of the recording and payment of a debt should be separate to avoid the ‘phony’ customer situation. In a factory, you might institute a data collection point using bar coded pallet numbers on transfer from the factory production floor to inventory. This separates inventory from the waste stream, sometimes the source of an opportunity, as it was in the example noted above. This latter example also offers management some of the data necessary for improvement projects as an added benefit.
- Regular and close management of the debtors and creditors ledgers with the bank accounts. This will detect unauthorised payments made from the bank accounts.
- Restrict manual transactions, particularly where they involve cash.
- Control access to the books to ensure accountability of individuals for accuracy and completeness.
- Build in multi person authorisation into standard processes.
- Have clear transaction audit trails, that are monitored.
If some of these seem a bit ‘over the top’ for an SME, I understand. However, the volume of fraud that goes undetected and unreported is huge, and very damaging for an SME without the financial depth to easily navigate the losses.
Implementing some simple safeguards is just responsible business practice.
Get some help if you need it, and usually the return on a modest investment will be very quick.
