Empowering Accountability first and foremost occurs in the overt actions of leaders, such as communication. Other equally important actions include quality of strategic thinking, planning, design of strategic initiatives, sustaining execution during hard times, learning from experiences, and sustaining momentum until desired results are achieved. All of these actions are part of what is required to be a leader in a complex world.

Often, I am asked, “How can I see accountability in my organization”? The answer to seeing actual accountability in your organization is watching the action. That is, the manifestation of accountability is action. Actions shine a bright light on executives and managers being accountable, or the lack thereof. The effectiveness of your organization is determined by the degree to which your leaders hold themselves to account for their actions, communications, and results.

Executives must act from being accountable for all the results, not just the ones they like or those that make them look good. Leaders’ actions must include communication about decisions made and intended results from these decisions and actions. Employees pay very close attention to executives’ and managers’ actions and non-actions, what is talked about and what is ignored, what is rewarded and punished, and the support given for those in the organization who step out and try to lead.

Empowering Accountability

Empowering Accountability is created by leaders in order to carry out their roles. These roles include aligning people, communicating goals, developing commitments, motivating, and inspiring. Empowering Accountability creates a new context and collaborative environment for people in the business. This clarity of accountability energizes your people to step out, to be more creative and resourceful in seeking breakthrough opportunities. This energizing is the evidence of leadership. Therefore, accountability and leadership are inseparable, as leadership is seen in the inspired actions of others.

Leaders are responsible for imagining possibilities, then turning possibility thinking into an inspiring shared vision, per Kouzes and Posner in their 2002 book, The Leadership Challenge.

Empowering Accountability allows your people to experience being trusted and enabled to take action and see the consequences. Seeing the consequences is essential to fine tuning and ultimately achieving a result. Yet, much too often there is not an environment of accountability, which limits the effectiveness and satisfaction of people.

Accountability Establishes Clear Expectations

Successful execution of growth strategies requires extensive communications and engagement to assure your people know and understand what is expected of them. People will not be accountable until they fully embrace the expectations. Assumptions that “We told them” means “Our people know and understand our expectations and are on board with them” is one of the prime reasons strategic execution projects fail. That is, executives and managers assume that “We told them, so people know” is dangerous. Also, it simply does not work.

Don’t assume your employees know what is expected. An email, town hall meeting, or video alone does not assure people actually know and understand the expectations. Instead, paint a word picture by clarifying, detailing, and outlining what is expected. Unless the expectations are made explicit, as well as the metrics for how all performance will be assessed, there is no reason to expect people to act differently than they have in the past. Only when your people know and understand will they begin to take on being accountable; and only when they have chosen to be accountable can Empowering Accountability be created.

Accountability Establishes Boundaries of Behavior

Empowering Accountability involves communicating to your employees the boundaries of acceptable behavior, as well as the consequences of desirable and undesirable behavior. When appropriate, it is also important to point out the consequences for violating these boundaries.

Empowering Accountability assures that employees know which boundaries your executives want them to push. For example, in down markets, there is a strong temptation to cut prices in order to capture orders. Yet, it is hard to know when the prices have been cut lower than needed, which has a big impact on profitability.

I have worked with a CEO who would encourage his business leaders to experiment with raising prices as a means of testing where the bottom is. In many companies, raising prices in a down market would be punished. Yet, in this case, the CEO made it safe for the business unit leaders to challenge or push these perceived boundaries.

The same CEO also had a colorful way of challenging the business units to bring forward bold growth opportunities. In many companies, there is an unwritten rule that it is not wise to bring growth opportunities to the CEO that are bolder than his/her preferences. As a consequence, the CEO’s personal style and temperament becomes an invisible constraint on potential growth. This CEO’s statement was, “I want you to bring forward growth opportunities that are so bold it will make my hands turn white while gripping my chair.” That set a very high bar for the businesses to purse bold growth ideas.

Accountabilities also establish boundaries that are “out-of-bounds.” This may include geographies which are simply “off-limits” because of political instability and other factors. In one E&P company, it was simply the point of view of influential directors…

For example, I was working with a UK E&P company who wanted to expand its gas operations in Pakistan. A very influential director held strong beliefs that their company should reduce its exposure, rather than increase it. The CEO was undeterred and finally convinced this director to go on a tour with the executives in charge of operations in the country. A well-orchestrated visit was planned and was proceeding smoothly until an attempted coup broke out. While the director and executives were unharmed, there were some very tense moments. Needless to say, the director’s point of view was not changed.

Empowering Accountability assures that employees know the boundaries. This includes which boundaries the executives want them to push vs. which boundaries are “out-of-bounds.”

Accountability occurs in action. It is a beautiful thing to watch!

 

Implementing Empowering Accountability in your organization will take leadership, first and foremost. If you’re an executive and want to lead this change, you may want to read our whitepaper entitled ‘Change Management vs. Change Leadership’.

In it you will gain insights into:

• what is the key difference between these two and why is it critical
• a simple exercise framework to look at the level of the problem driving the change effort
• understanding the distinction between a ‘default future’ and an ‘invented future’

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Executives approach a possible transaction with the steely resolve to be disciplined in negotiations. Accountants, investment bankers and lawyers are hired to assist internal resources in this process. Then somewhere along the line, this self-imposed discipline breaks down and the prices and terms which are accepted are much less attractive than planned.

I had the pleasure of collaborating with the head of M&A practice for a premiere New York law firm. His firm specializes in mergers and acquisitions and is involved in many of the largest transactions. I asked my colleague to explain the phenomenon in which executive teams start off with a disciplined approach to price and terms, only to see that discipline erode towards the end of negotiations. My friend laughed, and then gave a colorful explanation. He said that what happens at the start of the process is that the executives give instructions to advisors that they must get the deal done on the executives’ terms. With that mandate, the lawyers begin hard negotiations with the other side. Then somewhere along the way, the instruction changes to “win the deal”. While it is seldom said “Win the deal at all costs”, that is essentially the message.

My next question was, “What happened to cause this change?” My friend said, “Simple, it becomes personal”. That is, these transactions often go from a disciplined, business approach to personal competition of who will win. How this might happen is understandable given most executives are competitive by nature. “Winning” becomes defined as closing the deal, which shapes the approach taken by advisors to the executive team. My friend described this as “The Testosterone Factor”, in which primitive forces overshadowed good judgement.

My following question was, “How does that happen”? In other words, “how is this personal competitiveness enabled and explained”. My friend laughed and said just one word, “Synergies”. This is confusing if looked at from definition of synergies:

Synergies is defined as the cooperation and interaction between two or more organizations to produce a combined effect greater than the sum of their individual effects.

The definition of synergies is the essence of value creation in acquisitions, i.e., two companies combining to create more than either could individually. How then could synergies be “misused”? My friend said that in practice the financial values assigned to synergies is often based more on what is needed to reach the desired sales price, rather than an accurate projection of what will be achieved in post-acquisition integration. Said bluntly, synergies are a “plug” inserted into the financial models to make the transaction look prudent. Hence the seduction of synergies.

Seduction of Synergies

Synergies is the “cooperation and interaction between two or more organizations to produce a combined effect greater than the sum of their individual areas”. This greater effect can be anticipated through increased geographical reach, expanded market share, improved technologies, introduction of new products and services and reduction in costs due to elimination of redundancies and stream lining operations. Perhaps the most seductive of all synergies is this latter category of cost savings. Cost saving synergies are often a primary financial basis which justifies making the acquisition. That is, the purchase price to be paid for the acquisition is justified based on expected synergies from cost savings. These cost savings are based on eliminating redundant groups and positions. This practice is so common that a classic joke says that “the word synergy is unemployment spelled backwards”.

While this practice of identifying synergies as initial cost savings continues, the data does not really support the validity of this practice. Numerous studies have reported that the expected financial savings are not achieved. Further, these expected savings are not maintained over time. Among the reasons for are:

• The estimated cost savings are a mirage or myth. The numbers work in spreadsheets, but lack a basis in reality. Once the effort to reduce costs begins, it is discovered that the groups and functions are more intertwined with operating the business than understood by the analysts running the spreadsheets.
• Achieving sustainable cost reductions is complicated, and requires more than slashing departments and laying off people. Unless the work being done by those departments and people is eliminated or redesigned when the positions were eliminated, the costs will creep back. If only the people doing those roles went away, the work to be done stayed, and in some cases expanded due to complications of the combined organizations.

Accommodating the Seduction of Synergies

Once the transaction closes and post-acquisition integration begins, the challenge facing the integration project managers and teams is to create and capture as much value as possible. The predictable response is to close the gap with cost reductions. This usually means cutting deeper than originally planned. While this give appearance of responsible actions, it often has the opposite impact on achieving the expected long term synergies. A classic English expression which describes this is ‘Penny wise, pound foolish”.

We believe that synergies are best achieved by creating Breakthrough Projects. These projects teams are empowered to create new thinking which will produce sustained values. If cost reduction is needed, that can be reflected in the Charter for one of these Breakthrough Projects. The team is instructed to first focus on how to reduce the unnecessary work and only then explores if headcount reductions are required. These Breakthrough Projects focus on primarily on getting costs out, rather than getting people out. When a Breakthrough Project concludes that people reductions are inevitable, then the actions related to eliminating positions is more widely supported by employees and more effectively implemented.

Summary

The reduction in self-imposed discipline is often accelerated by the seduction of the types of synergies in mergers and acquisitions. Unfounded expectations are established for value creation from the combining of the two organizations. The task of achieving these unfounded expectations falls on the post-acquisition integration project managers and teams. Using Breakthrough Projects to accelerate value creation with synergies has proved to be very successful.

 

Half of M&A transactions fail to create value. Ever wonder why? Download our whitepaper ‘The Conundrum of People in M&A’, and understand the critical elements that impact mergers and acquisitions success or failure.


In it, you will learn:

• Eight common flaws in decision-making often made by executives in M&A transactions
• Why the integration process is so critical
• Tactics in organizing, planning, and communicating that lead to successful integrations

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Leading in a complex world requires continued development of leadership attributes and tools.

An excellent example of this is when accountability is created in the context of leadership, rather than management. Leaders use accountability to empower, while managers use it to control. This is entirely consistent with the differences in management and leadership.

In many organizations creating leadership accountability this is easier said than done, since there is such strong presence of management orientation and little leadership orientation. John Kotter once wrote, “Most U.S. corporations today are overmanaged and underled”. In companies which are ‘overmanaged’, accountability will be designed to produce consistency, control and order. In contrast, accountability in leadership context is designed to align, communicate, engage, motivate and inspire.

Leadership accountability is a primary tool of executives to successfully achieve strategic growth. Executing growth strategies involves implementing substantial change, which in turn requires leadership. While leadership accountability provides a powerful leverage for growth, it can lose its power if the executives and senior managers fall into common organizational traps. These traps can in ensnarl even the most committed, experienced and intelligent executive.

Blame and Excuses

Blame is not useful in leadership accountability as it shuts down openness and transparency. Blame involves accusing another of being the cause for failure. In business it is often used to avoid or duck accountability. In many companies ‘The Blame Game’ dominates much executive energy and time. The effort is spent in documenting and explaining so that when another attempts to blame, there will be ample justification to assert innocence. Too often executives in business view other executives as the enemy and spend so much time posturing against other executives that there is little time to be concerned with customers, competitors, and shareholders.

In his book, The Oz Principle: Getting Results Through Individual and Organizational Accountability, author Roger Connors found that a thin line separates success from failure and the great companies from the ordinary ones:

“Below that line lies excuse making, blaming others, confusion, and an attitude of helplessness, while above that line lies a sense of reality, ownership, commitment, solutions to problems, and determined action.”

Making Scapegoats

The term scapegoat is commonly used in organizations, but most people do not know of its origin. It comes from the Old Testament in the Bible. Leviticus 16 describes how the Jewish chief priest symbolically laid sins of the people on the goat, which was in turn was driven out into the wilderness to meet its certain demise.

The scapegoat has been applied in social systems, as well. It denotes the practice of placing all the blame for the organizations troubles on an individual as a means of reducing the stress on that system. The problems are blamed on another and thereby the guilt and responsibility is transferred. Scapegoating is common in organizations, especially when the organization is in midst of change and/or not functioning well.

I often use the prevalence of scapegoating in an organization as an indication of organizational health. One can determine this as well by simply asking a few questions. A classic place to start is with the functional groups which could be causing stress, such as “Tell me about HR?”.

Executives who are executing growth strategies must studiously avoid blame and scapegoating, as well as not allowing others to do so. Empowering accountability will not flourish in environment of blame and scapegoating.

Leads to Avoidance of Accountability and “Becoming Victims”

You probably have heard the old joke about the teacher who asked a young student why his math homework wasn’t turned in, to which the young student replied, “Well, you see I did my homework but then the dog ate it”. While we joke about such ludicrous excuses, think about this the next time you are in a budget meeting or operational review. Look to see how often you hear the adult version of “the dog ate my homework”.

We in the U.S. have taken excuse making to an art form. Conner’s says that Americans lead the world in what is termed the “cult of victimization”. The quote is from an article in The Economist that describes this as “an odd combination of ducking responsibility and telling everyone else what to do”. Certainly this tendency is alive and well in U.S. businesses.

Excuse making is one small step up from denial. In denial, the person says “it never happened”. In excuse making, the person says “It did happen but it is not my fault because of these extenuating circumstances”. Excuses are a story that a person makes up about the circumstances surrounding the events and results that serve to absolve the person of any accountability for what happened.

Excuses cloud the conversations and thinking, so little progress can be made toward producing the desired results. Further, excuses begin as little stories, but lay the foundation for much more debilitating organizational dynamics. These dynamics are becoming victims and building campaigns against other departments, functions and organizational units in the business.

Until an individual and organization takes accountability for the outcomes and does not cover it with an excuse or story, that individual and organization will be a victim. Victims are the opposite of being accountable. Victims are passive and not at fault. Individuals who are victims are not accountable and will not be effective as leaders. Becoming a victim precludes individuals, groups and organizational entities from owning their own involvement and contribution to what happened.

Avoiding These Traps

How can we avoid these traps? Being alert is the first step, of course. Beyond that I encourage you to talk openly with the other executives and managers who will be leading the growth strategies. Staying alert as a group is your best defense. Speaking immediately to one another if you see even a hint of one of the traps coming into play. Chances are others will see the trap waiting for you before you do.

Who could you talk today to begin collaboration on avoiding traps to your establishing empowering accountability and leadership?

 

 

Half of M&A transactions fail to create value. Ever wonder why? Download our whitepaper ‘The Conundrum of People in M&A’, and understand the critical elements that impact mergers and acquisitions success or failure.


In it, you will learn:

• Eight common flaws in decision-making often made by executives in M&A transactions
• Why the integration process is so critical
• Tactics in organizing, planning, and communicating that lead to successful integrations

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Having been a part of many integrations of mergers and acquisitions with different clients, we have observed numerous issues that predictably arise. These issues affect the integration project leaders, the integration teams and ultimately a broader group of employees. While there was great effort in the pursuit of an M&A deal, some of the effects of these efforts on everyone else in the organization often go unnoticed.

The Chase Begins

There are predictable dynamics that will happen as the “chase begins”. As an example, rarely do the M&A integrations go as scheduled. Rather, there is a continual speeding up and then slowing down of the process. A visual analogy to this phenomenon is what happens when a train with a heavy load of cars begins to move. There is often lurching back and forth.

This phenomenon of speeding up and slowing down is due to several factors:

• Buyer and seller negotiating the transaction because of changes occurring in either or both of the businesses
• Questions or delays due to outside factors, such as regulatory bodies, unions, local or national governments, etc.
• Changes in terms needed to fit outside financing sources’ requirements
• The time of the year (e.g., people going on vacations, holidays, etc.)
• Internal snags coming from legal, accounting, finance, HR, etc.

The Jolt Factor

Obviously, these sorts of issues are to be expected, and managed through. But generally, what is not addressed is the stress added to the executives involved, and to the people in the organizations involved. This stress often has a jolting impact on everyone. This jolting experience has a growing impact on the people in the business as each delay happens. We can use a freight train as a good analogy.

When the engine of a train begins moving, there is a jolt felt by each of the cars as their couplings become engaged. This is referred to as slack action in the railroad industry.

From Wikipedia:

In railroading, slack action is the amount of free movement of one car before it transmits its motion to an adjoining coupled car. This free movement results from the fact that in railroad practice, cars are loosely coupled, and the coupling is often combined with a shock-absorbing device, a “draft gear,” which, under stress, substantially increases the free movement as the train is started or stopped. Loose coupling is necessary to enable the train to bend around curves and is an aid in starting heavy trains, since the application of the locomotive power to the train operates on each car in the train successively, and the power is thus utilized to start only one car at a time.

When the train starts, the first car behind doesn’t move until the slack is eliminated in the coupling, then it jolts into movement. The second car doesn’t move until the slack is eliminated between cars 1 and 2, and then car 2 jolts into movement. And so on.

Organizational Impact

As an executive of a company involved in some merger or acquisition, the start and stop nature of these transactions give this jolting experience to all people in both companies, even if they are not directly involved in the process. And just like a train car along the line, if you can’t see what the engine is doing, the start and stop of the process turns out to be a surprise and a jolt. This goes on for either starting or stopping the process, just as it happens on a freight train.

The resulting organizational impact includes,

• Stress from the jolting actions
• Feeling “out of the loop”, so less effective in making things happen
• Frustration because no one understands what is really happening
• Loss of enthusiasm for the transaction, especially if the transaction takes a long time

Transformational Leadership provides an excellent antidote to mitigate these impacts during any M&A activity, for both organizations involved, and particularly for major M&A activities. My partners and I have written extensively about Transformational Leadership, which is available on request.

 

 

Half of M&A transactions fail to create value. Ever wonder why? Download our whitepaper ‘The Conundrum of People in M&A’, and understand the critical elements that impact mergers and acquisitions success or failure.


In it, you will learn:

• Eight common flaws in decision-making often made by executives in M&A transactions
• Why the integration process is so critical
• Tactics in organizing, planning, and communicating that lead to successful integrations

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