Driving accountability within the organizational DNA can be aspirational empowering self-management
During one of our recent performance meetings we were discussing the topic of “how we reduce operating costs”. A common problem of more revenue less profit
Our analysis showed that the operating costs had increased by a proportion far greater than the revenue growth.
The reason for the cost increase was due to the implementation of a mid-management layer.
The driver to this strategy was due to:
Inability to attain the required efficiency improvements
Ongoing customer execution problems that was proven to be very costly from a customer retention perspective
The ability to standardize process. (different units were doing things differently with varying degrees of success)
“Our people are very responsible, its not that they come to work wanting to do the wrong thing. They need training and greater supervision. We have a management structure that is to thin and as a consequence the development of our people has been neglected”
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The CEO further added that
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On face value its difficult to argue the point.
This strategy can be considered to be an investment in the future of the business.
The consequence of having more growth with less profit is just part of that investment.
It was clear that the senior management team were in it for the long term.
Here is the problem and we see this condition happen fairy regularly within the clients that we touch
Firstly, hiring this layer of mid managers consumed a significant part of the daily activities of the senior management team.
As one of the newly hired mid managers told us “we are in the fire fighting business I would love to see the day when we can be in the fire prevention business” We are losing customers at the alarming rate. And I don’t blame them.
In our opinion this is a classic example of addressing the symptom not the problem.The secret was in what the CEO said. “our people are very responsible”
But what are they not ….. ACCOUNTABLE
At the end of the hiring cycle the neglect of these daily activities caught up. Renewing the focus on running the business. The consequence was a group of newly hired mid managers with inadequate onboarding and coaching. The consequence of that was these new managers we not doing what they were hired for.
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Accountability is not something that just happens.
It is engineered in the business until the culture of accountability is embedded in the organizational DNA.
When that happens, the result is a greater level of self-management which in turn creates a very scalable organization that can grow with a very thin management cost structure.
The mojo of the senior management team is to tell people what to do and expect that it gets done.
To be real there is a component of this that has to happen in any business and we get it.
The reality is when things are not been done how this is dealt with.
Culturally there were many indicators that restricted the ability for people to be accountable.
An extract from our business diagnostic revealed:
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At the end of the day the REAL PROBLEM is that the people within this business are UNINTENTIONALLY MICRO MANAGED.
There is little evidence of SELF MANAGEMENT
Self-management at is foundation ensures a culture of ACCOUNTABILITY.
It is also the vehicle for true scalability.
As a starting point to achieve this culture we recommend our ET3M approach. (more about this later)
E= Set a clear expectation
T = Ensure you people have the Tools or resources to meet the expectation
3M= Monitor, Measure, Mentor towards the expectation correcting variation.
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We also know by now you are most probably thinking. Yep that may be the case in other businesses but not mine.
Good for you!
But just in case we have prepared a responsibility vs accountability table for you to evaluate.
Have fun and remember
“Run the business by the numbers”
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About Science of Business Wealth
We help high achieving but overworked business owners run their business by the numbers so they can be confident they will have all the cash they need to fund their lifestyle and leave a healthy legacy.
Transforming your business from its current state to investor readiness, irrespective of your intention to exit.