Culture and accountability are not new concepts, however, for many organisations, driving a culture of accountability seems like an intangible feat with many organisations leaping to enhance the operating model without recognising the need to manage the human factors. This can be a costly oversight and without considering a unified approach and mindset to drive accountability, the desired benefit and return will not be realised.
Yvonne Kelleher and our People and Change team explain below how a trustworthy organisational culture can be put in place.
What is culture?
Organisational culture determines how an organisation operates and gets things done in response to internal and external changes. It is the product of shared basic assumptions that underpin values, norms and behaviours. It emanates from five core areas illustrated below.
What is accountability?
Accountability refers to the obligation or willingness of individuals, organisations, or institutions to take responsibility for their actions, decisions, and their impact on others. It is best defined as, being answerable for one’s choices and behaviours as well as accepting the consequences that arise from them.
Why does culture matter?
There are so many benefits to establishing a strong organisational culture, we have set these out below. An organisation’s culture will either support or inhibit its short and long term business performance.
The accountability imperative
In this time of increased public and regulatory scrutiny and change both in Ireland and globally, it is crucial for executives to set a leading example. They need to exhibit accountability and maintain trust with both stakeholders and employees.
The Central Bank of Ireland is in the process of rolling out an Accountability Framework in which regulated firms will now have to clearly document what senior executives are responsible for within organisations. This accountability framework was in response to a Behaviour and Culture Assessment that the Regulator undertook in 2018 (on the back of a significant period of mis-selling, customer restitutions and diminished or lack of trust within the financial sector). Its intention is to improve executive accountability by increasing the transparency between firms, shareholders and the Central Bank, particularly where accountability lies in organisations.
Deputy Rowland (deputy Governor at the Central Bank) says that the new framework will underpin sound governance across the financial sector “it will achieve this by setting out clearly the good practices expected of firms and role-holders and their accountability”.
Culture and Accountability are not static ideas, nor do they just impact one industry. In fact, in Ireland we have seen over the last 12 months that similar questions are being asked where a lack of accountability underpinned by poor behavioural drivers across a range of industries such as financial services, public bodies and broadcasting has cultivated in computational damage and a loss of stakeholder and employee trust. In some instances, this has led to Government intervention and inquiries taking place.
Time is of the essence for organisations to conduct a stocktake, to re-assess their culture journey and address any gaps to promote and embed, an effective and resilient culture to drive and enforce accountability. Organisations should look at this as not only a necessity but also an opportunity that will support the success of the organisation in the long run.
Organisational accountability – what is it really?
Organisational accountability occurs when all employees behave in a way that promotes the successful and timely completion of their responsibilities. It involves the organisation being answerable for its actions, decisions, and impact it has on stakeholders, including employees, customers, shareholders, communities and of course the environment.
Examples of what a poor culture of accountability looks like
Lack of transparency
Often there is a lack of transparency in decision-making processes, communication and reporting. Information may also be withheld, buried, distorted or not shared openly with stakeholders.
Lack of clarity in roles and responsibilities
When there is a lack of clarity regarding roles, responsibilities, and expectations, it becomes challenging to establish accountability. Unclear lines of authority, ambiguous decision-making processes, and overlapping responsibilities can contribute to a culture where no one feels truly responsible or accountable for outcomes.
Lack of leadership
Leadership plays a crucial role in shaping the culture of an organisation. In a poor culture of accountability, leaders may fail to model and uphold the principles of accountability. When leaders themselves evade responsibility or engage in unethical behaviour without facing consequences, it sets a negative example for others.
Lack of trust
There may be an environment of distrust and scepticism. This can lead to a lack of collaboration, communication, willingness to report issues / mistakes.
Low consequences for misconduct
In organisations with a poor culture of accountability, there may be a lack of appropriate consequences for unethical behaviour or poor performance. This can lead individuals to believe they can engage in misconduct without facing significant repercussions.
Fear of retaliation
On the other side, a poor culture of accountability may foster an environment where individuals fear retaliation for speaking up, reporting wrongdoing, or challenging the status quo. This fear can deter individuals from holding themselves or others accountable, leading to a lack of transparency and a perpetuation of negative behaviours. It is important therefore to get a balance between consequence and a fear of retaliation.
Low morale
A lack of organisational accountability can result in an employee’s sense of purpose diminishing. This results in lack of motivation to do your job and impacts the quality of employees work.
The link between culture and accountability
Today, an organisations success is no longer just about the bottom line but success is also determined by qualitative inputs like transparency, trust and employee performance, productivity, collaboration and engagement. Therefore, cultural norms, values and practices within an organisation can greatly influence the level of accountability that is expected, accepted, and enforced to ensure sustainable change.
1. Trust and transparency
Culture affects the level of trust and transparency within an organisation. In cultures where trust is high and transparency is valued, there tends to be a greater emphasis on accountability. Employees tend to hold themselves accountable for their actions as they believe in the importance of integrity and honesty.
2. Consequences and enforcement
Cultural attitudes towards consequences and enforcement also play a role in accountability. In some cultures, the fear of reputation or trial by the media or social stigma may serve as a powerful deterrent leading individuals to be more accountable for their actions. In other cultures, legal frameworks and regulatory systems play a key role in enforcing accountability (like the new individual accountability regime currently being implemented by the Central Bank in regulated institutions within Ireland).
Cultural influences on accountability can vary significantly across different societies and organisations, in particular as the operating and workforce landscape continues to evolve. While some cultures may prioritise individual accountability, others may place a greater emphasis on collective responsibility. Understanding and addressing these cultural dynamics including behavioural drivers are essential for promoting a sustainable culture of accountability and ethical behaviour.
Key considerations for success
- Define roles, responsibilities and performance metrics.
- Establish ethical guidelines, whistle blowing policies and codes of conduct.
- Continually assess these standards in line with environmental changes.
- Define and establish statements of responsibilities or accountability statements.
- Ensure that leaders are actively promoting and reinforcing the importance of accountability throughout the organisation.
- Scenario training should be rolled using real life examples.
- Ensure that there is a robust performance management and evaluation process in place at all levels of the organisation.
- This includes setting goals, regularly reviewing progress, constructive feedback and recognise achievements.
- Ensure that there is a clear framework for performance management that is both understandable and demonstrable.
- Ensure that performance evaluations are conducted fairly, and individuals are held accountable for poor misconduct.
- Ensure that there are mechanisms in place to address instances of poor performance, misconduct, breaches of ethical standards.
- Consequences for non-compliance, poor or unethical behaviour should be applied consistently at all levels across the organisation and it should be fairly applied with really clear guidelines for application.
- Remedial actions are taken to address issues, learn from mistakes and prevent recurrence.
- Transparency is essential for fostering accountability.
- Organisations with a strong culture of accountability promote open and honest communication at all levels.
- They provide regular and accessible information about strategic objectives, performance metrics, financial practices, and any relevant updates.
- Employees are encouraged to report concerns, share feedback, and participate in decision-making processes.
- A culture of accountability embraces a growth mindset and a commitment to continuous learning and improvement.
- Organisations encourage learning from mistakes, promoting a culture where individuals are encouraged to share lessons learned, implement corrective actions, and continuously refine processes and practices.
- Empowering your people to work independently and collaboratively is key to achieving a culture of organisational accountability.
- Giving your employees power and freedom to make decisions that impact their results, employees gain a stronger sense of accountability.
This will encourage employees to not only implement it but ultimately feel part of the overall objective resulting in avoiding a culture of just compliance or even resistance.
How KPMG can help
Our team has a lot of experience in helping organisations across all sectors in the areas of culture and accountability. Below are some of the areas that we are particularly experienced in:
- Design or assessment of end-to-end organisational culture including Inclusion, Diversity and Equity
- In-depth analysis of organisation accountability
- Design of roles and responsibilities / statements of responsibilities across the organisation Design of performance management system
- Assistance in ensuring compliance with the individual accountability regime
- Design of results-based accountability framework
We have access to our KPMG global network and advisory panel which includes our accountability, behaviour and culture Subject Matter Experts from the UK and Australia, Netherlands, Canada, Germany. Our tailored solutions leverage this global expertise.
Get in touch
At KPMG, we understand the importance of championing accountability through organisational culture. Our team of seasoned professionals is ready to assist you in navigating the complexities of change, ensuring a successful transformation for your business.
Whether you're struggling with aligning values, driving employee engagement, or enhancing leadership effectiveness, we have the expertise and experience to help. Our tailored solutions are designed to address your unique needs, fostering a culture of accountability and driving sustainable growth.
Don't let organisational change hold your business back. Reach out to our team below now to schedule a consultation. Together, we can unlock the full potential of your organisation and set it on the path to success.
