You really have no choice but to constantly, and persistently, work on improving your financial results.
Expenses are always rising. Your competition is gunning for your customers. Maintaining the status quo is seldom a good strategy if you are serious about financial success in business.
Defining the metrics that matter is an important first step. Setting clear goals for each of those metrics is also important.
The hard part is being very clear with yourself about how you are going to hold people accountable for achieving your financial improvement goals and targets.
Verne Harnish, in his book Scaling Up, talks about the difference between accountability, responsibility and authority.
Here is a great example he uses for his own company, Gazelles, Inc.:
“As an example, Gazelle’s CFO has accountability for cash – she literally “counts” and reports it to the team daily. And she’s accountable for alerting the team if she senses any potential issues now or later in the year.
In turn, Verne, as CEO, maintains authority over cash, signing off on major expenditures and investments.
And everyone in the company has responsibility for making sure that cash is spent wisely, and that deals/contracts are structured so they help generate vs. absorb cash as Gazelles continues to scale up.”
That’s a very interesting way to look at the difference between being accountable, having authority, and being responsible.
Reframing the Question
So, the question “How do I hold people accountable for results” might need to be changed to “Who is responsible for achieving the results”?
And two follow up questions: “What are the rewards they will receive for achieving the results”? And “What are the consequences they will experience if they fail to get the results”?
Peter Bregman wrote a great (and short) article in the Harvard Business Review titled The Right Way to Hold People Accountable.
Here is a shortened version of the five areas the author says you need to create clarity on if you are going to foster accountability with people:
Clear expectations. The first step is to be crystal clear about what you expect.
Clear capability. What skills does the person need to meet the expectations?
Clear measurement. Nothing frustrates leaders more than being surprised by failure.
Clear feedback. Honest, open, ongoing feedback is critical.
Clear consequences. If you’ve been clear in all of the above ways, you can be reasonably sure that you did what’s necessary to support their performance. At this point, you have three choices: repeat, reward, or release.
My suggestion is to first become very clear about the metrics that matter… the metrics that can really move the needle on profitability and cash flow in your business.
It will be hard to create accountability without a crystal-clear view of the metrics you are trying to improve.
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