System of Accountability

A system of accountability is a process or a way of operating that has people be fully responsible for certain metrics or activities.

I was very impressed when I learned about FAA requirements in which Pilot and Co-Pilot, each individually have to report on any dangerous issues to the airline and the FAA. The airline has to report it to the FAA and the Pilots Association and manufacturer's when it is a a manufacturer related issue. Each party is accountable for reporting. Airline, FAA and manufacturer are required to address the problem. It is a very powerful system of accountability.

Flying these days is extremely safe. Thanks to technological advancements... and thanks to an incredible system of accountability. For example, recently, two engines failed simultaneously when pilots attempted to land in the far East. This is the kind of problem that was considered impossible... In this particular instance, the engines were restarted pretty quickly and the plane was landed safely. But the system of reporting gives each party a chance to develop the necessary steps to prevent this problem from happening. Thanks to that, flying will be even safer.

One could imagine that in a system where no requirements for reporting were established, there would not be a consistent opportunity to address the issue unless there was an actual accident. The fact that each pilot individually and the airline are responsible for reporting problems is a very powerful system of accountability and makes a tremendous difference to society. Pilots take action immediately and a chain reaction starts such that issues are investigated or studied and appropriate actions are taken to solve the problem or steps are taken to prevent it from happening.

Now, imagine that a business also has a strong system of accountability in place and embedded in its culture. I am not talking about bureaucracy. I am talking about a real culture of accountability. No "making believe we are accountable" but real responsibility.
This can system and culture can only be in place if there is strong enough leadership in the company. One that has each individual being accountable and leader in that given culture. I always find it interesting that, one takes responsibility... responsibility is rarely "given" to someone.

Most entrepreneurs know the hard way that they are fully accountable for their business. Their livelihood depends on it or they are fully vested in the success of the business. In general, in a culture of "employment", employees are not as focused. This is more and more clear the larger is a company. A typical symptom of lack of accountability is the "I'm busy, therefore this is good" culture. People expect a paycheck at the end of the moth because they were busy doing things.
In a start-up environment, management typically tries to foster such a culture by distributing stock options and stocks. That is a starting point in having employees fully vested in their success and the success of the business. I am sorry to say it is not sufficient. It is also not possible for all kinds of business to be giving stock options constantly and to large percentages of the employee population. Establishing a culture of accountability is critical.

Companies that implement a culture or systems of accountability will produce extraordinary results. A classical example is the culture Jack Welsh fostered at GE with its performance evaluation criteria. Similarly, I suspect that this is a critical element of success for entrepreneurs such as Warren Buffett.

It is possible to implement a culture of accountability in any size company. It will take personal commitment from the entrepreneur's or management team's part to create and reinforce it. Implementing it involves defining a company vision with measurable and specific business results for the organization and culture. Each employee will need to define their contribution to it. Each person will need to "take responsibilty" and manage the process and fostering the behaviors that will create a lasting culture of accountability--leadership, teamwork, problem solving among others.

This kind of culture will ensure company performance and foster prosperity in a community or society. Ultimatelly, it can transform how people relate to their jobs and allow people incredible personal development and satisfaction.