Management Accountability
I was speaking to my brother Sam, a partner in a CPA firm, about a mutual client requesting a “what to do” regarding controls and profit missing…and theft… at a client company. I had delineated the obvious controls missing previously, but, again, they requested “what to do”. They wanted a “to do” list. Beyond “fix it”, the client personnel didn’t understand that the question was, in fact, the problem. Management of the troubled company never recognized the problem, or if they did, they either ignored it or didn’t know how to fix it. They believe that the implementation answer is in a book…or worse…a report, not in a process of changing themselves!
I remember years ago reading a book by the name of “Reengineering the Corporation”. It was a case study, “how to” book on changing process in a company. The book was immensely popular, however within 2 years a second book came out entitled “Reengineering Management”. Changing people and process hadn’t worked as envisioned for the readers of the book who tried to change things at their companies, because management hadn’t changed the way they see and act daily.
It’s been my experience throughout my 30 plus years of working with management as a CPA partner, senior executive of a company, or consulting analyst/implementer/executive/business advisor that nothing ever changes unless senior management can be held accountable both operationally and financially to the changes envisioned. Accountability by definition in the dictionary is the state of “being obliged to account for one’s acts; being capable of being accounted/responsible”. The word account means to determine, reckon, or measure, thus management must be subject to discipline and reward if what they do, that is agreed upon (buy in) and measurable, is done to desired timelines and results, or not done by inaction or failure to perform as agreed. The concept of “buy in” means that if something is achievable by definition and by establishing its reality, so all know it can be done, then, if management won’t do it or can’t do it, nothing will be accomplished. Thus management must be changed physically or by process in those circumstances…even the operational role of a privately held company owner…if change that will measurably increase profit and ease operations is valid, achievable, and if the company is focused on continued financial success. Leadership of the company must have the continuing WILL to change and be better for their revenue growth, profit goals, customers, and retention of good and valued employees in order to assure that result.
