Management systems and accountability

I have done work on the subject of accountability which has led me to the view that a person or unit is accountable when

“the stakeholders of that person/unit have the ability to reward the person for good work or create pain for the person/unit when the work is not good”.

Clearly this is best done directly by the stakeholder interacting with the person or unit, as for a business unit (if the customers are happy they buy more or unhappy they buy less; if the suppliers are happy they deliver on time, if unhappy they deliver late or deliver substandard service, etc). But accountability can also be achieved through the boss of the person or unit:  the stakeholder signals to the boss if things are going well or badly and the boss then administers the reward or pain.  This indirect mechanism is much less effective, because the boss often does not pass on the reward or pain, or amplifies it inappropriately or filters the signals based on the boss’s own views.

The wonder of accountable people/units is that they do not need much external managing.  The person or leader of the unit is plenty motivated to get it right.  Of course a mission for the person or unit that fits with strategy still needs to be agreed, performance still needs to be monitored, and, when the person or unit is failing, someone needs to be developed or changed.

So there is a tight link between management system – planning, budgeting, performance review, people review, risk management, continuous improvement, etc – and organization design.  If the organization has been structured into accountable units, the management system, particularly on the issue of performance review can be much lighter.

Before I continue, let me just back up and explain why I arrived at this view of accountability.   I run a research center at Ashridge Executive Education and we have some important stakeholders – executives who read our research, the larger school, member companies who give us money, participants on our courses, editors of journals, etc.   As I was thinking about accountability, I was recognizing that I feel very accountable and I was wondering why.  Also, I only meet my boss, the Dean, for about an hour every six months; so I was not feeling accountable because of the management system.  I realized that I was feeling accountable because each of these stakeholder has the power of reward or pain over me (I won’t go into the details – but it is because the research center is self-financing).

I also realized that success is about doing a sufficiently good job for each stakeholder so that the stakeholder remains engaged with the research center.  Of course one of the stakeholders is the mission stakeholder: for us executives of large organizations. For this stakeholder the objective is not “sufficiently good job” but something more ambitious.  For the other stakeholders we needed to think about the value we could give to keep them engaged – editors, course participants, member companies, central IT, etc.   It is much easier to solve this puzzle if the stakeholder has the ability to communicate directly and powerfully (through their behavior and choices).   So one of the difficult relationships has been with central IT.  They could create pain and reward for us.  But we had no way of delivering value to them so as to motivate them to reward us rather than create pain.

So what stimulated me to write this blog.  First, there are some important ideas here that should influence organization design and management system design.   Second, I came across this paragraph in a blog by Leon Tranter

“In Toyota car factories, this (the ability to ‘stop and fix’) is implemented via something called “Andon cords”. These are big cords that hang from the ceiling in the car factory. If there is a problem anywhere that needs attention, and cannot be quickly fixed by one person, they pull the cord. Pulling the cord shuts down the whole assembly line. Everyone stops working on whatever they are doing and comes over to help sort out the problem. This might sound insane, but it isn’t. This is Toyota we are talking about here, the most successful car business on the planet. They pretty much invented Lean and they know what they are dong. Andon cords encourage a culture where problems don’t lie around and take root. They get fix and fast. Which means the rest of the business can then restart and keep going.”

I don’t think the Andon cords actually stop the line, but they do signal to management and engineers that they should stop what they are doing and run to where the problem is.  This mechanism gives the worker the power to create pain for the engineers and managers.  It is this sort of mechanism that creates accountability.

In an article I wrote for McKinsey Quarterly, I suggested that one of the ways of stopping corporate headquarters in large companies from being a burden on business units would be to give managers in business units (maybe all managers) the equivalent of an Andon cord so that they could blow a “bureaucracy whistle” when activities by headquarters were time wasting or interfering and the “whistle”  would bring senior managers running to “fix the problem”.

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About andrew campbell

Ashridge Strategic Management Centre Focus on strategy and organisation Currently working on group-level functions and group-level strategy
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