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Jul 24 2014

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In Case you Didn’t Notice … Corporate Accountability just Moved into a Fishbowl

corporate_governance_fishbowlWe have always lived in a world where shareholders (and the SEC) demand financial transparency, where global supply chains and business operations require visibility, and where manufacturing strives to make quality and productivity the priority. These are excellent pillars upon which manufacturers can build an agile, competitive company. But, as we’ve all witnessed, we don’t live in a perfect world. There are cracks in the corporate foundation for some organizations. That fissure is in the form of accountability—or, rather, the lack thereof.

The Sarbanes-Oxley Act of 2002 (SOX) introduced major changes to the regulation of financial practices and corporate governance, with an objective to improve visibility and accountability. SOX is widely credited for strengthening at least two major areas of investor protection:

  1. CEO and CFO responsibility and accountability for all financial disclosures and related controls; and
  2. Increased professionalism and engagement on the part of corporate audit committees.

Yet some continue to question its overall value, citing, as an example, its failure to prevent the situations that led to the financial crisis of 2008. Several other examples come to mind of companies that have not had “full disclosure” across their operations.

I would propose that the ultimate solution really can’t come from legislation or rules passed by companies or governments. It has to come from within. But, unfortunately, not everyone has such clear morals, especially when role models continue to reveal their less than stellar judgments. Perhaps a more realistic and less benign perspective might instead be that people will continue to try and take shortcuts for as long as they think they can “get away” with it – a risk vs. reward perspective.

Business as usual in 2014 is very different than it was in 2000. Today there are many new technologies and social media platforms that make it easy for employees to share information. One wonders, however, even with all of the communication avenues available in the exchange of information, are people utilizing them? If it is not ingrained within the culture and people are not empowered to question management decisions—probably not.

Sometimes out of tragedy comes change for the better. One of the large car manufacturers is currently dealing with their own crisis. They are now on a mission to fix the cracks in corporate communication. They are not alone. Every large manufacturing organization faces similar, daunting challenges. People want to do the right thing, but, a series of poor decisions can often cascade into a really big problem – one that lacks a clear, easy solution. What is needed is to set a new industry standard for safety, quality and excellence.

If done right, this way of thinking could offer a pioneering transformation in the manufacturing industry in which transparency permeates the very manner in which people work. It is an approach that moves everyone in the organization from a defensive to an offensive mindset. The widespread acceptance and usage of social media might just be the catalyst that can make this transformation occur.

This concept is outlined in the book The Pursuit of Social Business Excellence by Vala Afshar & Brad Martin. And, it’s not easy to accomplish, as it requires an internal culture change, the authors explain: “How can an organization go from a defensive to an offensive, proactive, preemptive mindset if it is fearful that engineering will be upset if they proactively bring up the question of product quality?”

It’s a mindset that must be reinforced by the leaders of the organization. “Discipline, transparency, and adherence to service level agreements drive the culture of accountability,” the authors note.

While the book mainly focuses on the use of social media to reinforce the relationship with the external customer, it all starts within the organization. It requires an internal cultural re-definition that outlines how people should act. At its core is a cross-functional, inter-departmental cooperation and empowered employees who feel safe sharing constructive feedback—even to the CEO– without feeling that there will be negative repercussions.

“This requires a practiced ethos of working together, where everyone rows the same boat in the same direction,” the authors said.

Regardless your organization, as a leader of a global manufacturing organization, you need to get everyone driving down the same road to quality—quality in the products your manufacture and quality in the daily dialogue. Time will tell. If done right, we will see a new trend emerge over the next few years whereby corporate accountability becomes completely transparent, and we as consumers don’t get any more surprises.

Permanent link to this article: http://www.apriso.com/blog/2014/07/in-case-you-didnt-notice-corporate-accountability-just-moved-into-a-fishbowl/

1 comment

  1. Industrial Chillers

    I like it.It’s a attitude that must be strengthened by the management of the company. “Discipline, visibility, and sticking to support level contracts generate the lifestyle of responsibility,

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