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How Can We Have More Accountability in Our Family Business?

By Amy Schuman and Christopher J. Eckrich, Ph.D.

One of the most common questions we hear from business owning families is the request for help in building accountability. Often, the question focuses on the behavior of a specific family member who is employed by the business, but sometimes there is a feeling that accountability is lacking company-wide. Either way, the solution to the issue almost always requires both organizational and individual adjustments.

The solution starts with clarifying what is meant by “accountability.” Accountability is present when individuals are diligent and serious about fulfilling their commitments and when a system is thorough and unwavering in requiring its members to meet their commitments. Accountability is absent when individuals are flippant, casual or downright uncommitted to delivering on their promises and when an organization turns a blind eye to continued failure in this regard.

We believe that accountability is always influenced by both individual and organizational aspects.

Companies create a culture of accountability by insisting that all employees are crystal clear regarding their job responsibilities and goals and that they understand what is required to achieve their goals (e.g., hitting a sales target, timely reporting, lowering overhead). Clarity is ensured through job descriptions, an organizational chart with clear lines of responsibility and authority, and an annual performance review process.

Beyond clarity, organizational goals and roles must be realistic and achievable, and individuals must be held responsible for accomplishing their goals. This does not imply that individuals will be fired for missing goals, but that performance expectations are taken seriously and failure to achieve results will eventually affect compensation, promotional opportunities and even employment.

A big mistake that many family businesses make is to focus exclusively on individuals as the problem, rather than seeing lack of accountability as a symptom of a weak management system. For example, let’s consider the situation in which Ken—a son of the founder—appears adrift in his role as sales manager. He focuses on sales and customer relations. He sees (perhaps correctly) that he can consistently achieve his sales goals by doing the work himself, and he doesn’t want to be distracted by unending corporate meetings. After all, this approach has made him the top sales representative for many years in a row.

However, Ken’s brother—the CFO—and his CEO father are increasingly frustrated by Ken’s failure to perform the full scope of his responsibilities. They see his lack of attention to his sales team and staff meetings as a lack of accountability within the full scope of his responsibilities. They often lament Ken’s stubbornness behind closed doors. When other employees come to Ken’s father or brother to complain about his behavior, they are forced to agree that Ken just isn’t showing the commitment they’d like to see.

We would argue that the problem in this case is more about management systems and organizational accountability than individual intransigence. For Ken to be truly accountable, he must first understand what he is being asked to do. Clearly, Ken’s view of his role is different from his brother’s or father’s view. This conflict will not be resolved until each of them agrees on Ken’s specific roles, as well as the goals within those roles. The roles and goals should then be documented in Ken’s job description and used to evaluate his performance.

But how do we establish Ken’s roles and responsibilities? This will be very difficult to do unless all three individuals share a common understanding of the strategies being pursued by the company. Are they trying to own one particular niche? Are they trying to wean off a major customer and diversify their customer base? Are they trying to position the business for expansion by strengthening the sales force? Unless all three of them have agreed on the strategies of the firm, clarifying expectations of Ken will be difficult.

How do we determine the optimal strategy to pursue? The management team will only be able to commit to strategies after the ownership group has clearly articulated its vision and objectives for the business. Is ownership wanting fast growth?…slow growth and debt reduction?…diversification through acquisition? The strategies that management pursue should be driven by ownership’s hopes and expectations for the business, which in turn would drive the roles Ken should be undertaking in his capacity as sales manager, as well as his goals and ultimately, his day-to-day behavior.

It’s easy to blame individuals as lacking accountability and commitment to their jobs. A closer examination, however, will often show that management systems are not optimized. Accountability is not merely getting employees to do what you want them to do. It is a process of aligning each employee’s daily behavior with the agreed upon direction of the firm.

 

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