Openness and accountability matter at every level - Financial Reporting Council, Corporate Culture and the Role of Boards, July 2016
Many firms find it difficult to create a culture of openness and accountability within their firms, as suggested by the Financial Reporting Council in their recent report, Corporate Culture and the Role of Boards published in July, 2016. Below are three things to do today that can improve accountabilities with your organisation
1. Cut through complex organisational structures by embedding RACI within your organisational culture.
Too often, the organisational structure gets in the way of embedding openness and accountability within organisational cultures, this is particularly true of matrix organisations or where the structure has evolved over time (reflecting the political and power structures at the time). One of the best tools to cut through this ‘organisational complexity’ is the RACI model (known by various other names including Responsibility Assignment Matrix - https://en.wikipedia.org/wiki/Responsibility_assignment_matrix). Experience shows that implementing the RACI model either on its own or as part of an organisational change project can significantly improve clarity around organisational decision-making and action-taking. Additionally, as many people are in roles where they have multiple reporting lines, the RACI model provides not only clarity but is a great tool for managing up and down.
2. Stop measuring indicators (KPIs, KRIs and KCIs) using RAG – use RAGAR instead
he mantra “Measure what matters” is often preached but less often practised. The quality of indicators within use in many firms is poor, with typical problems including (but not limited to), lack of balance between financial and non-financial indicators, lack of balance between leading and lagging indicators, and poor overall definition of indicators. This lack of quality results in poor management conversations focused on a small number of easy to measure, often financial measures, which promotes, encourages and rewards short-term target chasing with an emphasis of getting all indicators on the dashboard green. Measuring using a RAG (Red, Amber, Green) approach is part of the problem. Instead use a RAGAR (Red, Amber, Green, Amber, Red) approach as per http://tinyurl.com/j27embg
This type of measurement is slightly more challenging to define but the resulting improvement in management conservations, decision-making and action-taking means the investment is worth it. RAGAR reduces ‘target chasing’ and promotes a culture where people operate within known and clear boundaries.
3. Use Action Registers and Checklists
One of the often neglected aspects of embedding a culture of accountabilities is managing the actual doing and follow through. Re-designing an organisational chart with names in each box is relatively simple and can improve decision-making but doesn’t fully address the follow-through – making sure that when people are busy day-to-day, agreed actions are completed on a timely basis. For regular, recurring actions that are designed to ‘run the firm’, checklists can be a powerful tool for ensuring that the recurring actions are completed in the right sequence. For ‘one-off’ actions, those that are designed to ‘change the firm’, Action registers with due dates are powerful drivers of change, and contribute to improving the quality of management conversation and accountabilities within the firm. Of course, improvement exists by overlaying the RACI model onto your Action Registers and Checklists to ensure everyone knows what they should be doing and by when, and by using a RAGAR based dashboard to visualise.