If you’re a finance leader, at one time or another, you’ve probably experienced friction with other senior leaders in your organization because of differing priorities or perspectives on how to achieve company goals. While you’re focused on fiscal responsibility, cost control, and long-term financial health, other senior leaders might prioritize innovation, market expansion, or development speed.
They may accuse you of stifling innovation by holding them to a budget, but you know that overspending on one program will require reductions elsewhere. They may even claim that it’s your job to find extra money by requesting it from the CFO or CEO. And, of course, when budgets go over or sales fall short, it’s often the finance leader’s duty to deliver the bad news, making you an easy target of blame.
But finance leaders shouldn’t be siloed into the roles of bad-news reporter, bean counter, and scorekeeper, as we wrote recently in CFO News. Only when accountability for financial targets is shared between finance leaders and their operational counterparts can true financial prudence and operational efficiency be achieved.
To drive this change, finance leaders must become role models of shared accountability, where all members of a team share a set of expectations and are answerable for their common actions or decisions. Creating an environment of shared accountability requires understanding how the brain creates expectations, how it responds when expectations aren’t met, and how to motivate ourselves and others to meet expectations.
The neuroscience of accountability
While accountability can be defined in different ways, it boils down to whether expectations for ourselves or others are met. Our brains set expectations to allow us to predict and respond to future events. When we expect one thing but experience another, our brain registers the mismatch as a reward prediction error.
We all know what it feels like when someone doesn’t meet our expectations. We experience a range of emotions, such as disappointment, annoyance, anger, and betrayal, that can significantly impact our performance and well-being, memory, decision-making, and emotional regulation. If the gap between our expectations and the outcome is more like a chasm, we’ll likely adjust our expectations to avoid future disappointment.
In contrast, when someone meets or exceeds our expectations, there’s no prediction error. We feel an array of positive emotions, such as relief, satisfaction, and gratitude, from a release of dopamine in the brain. A positive outcome reinforces our expectations and builds trust in those who have met them.
How can you help create a culture of shared accountability in your organization? It can be as simple as practicing a series of behaviors, or habits, that should be taught early in each finance team member’s leadership journey:
- Think ahead
Creating an environment of shared accountability requires us to think ahead. When we create a set of expectations with our operational partners, we form a shared prospective memory — a planned set of future actions required to reach our goals. To provide this common framework, each team member’s objectives, roles, and desired outcomes should be clearly communicated and mutually understood.
In addition, finance leaders must acknowledge that budgets require flexibility to adapt to unexpected events. Therefore, shared expectations must include the promise to rally together when the unpredictable strikes. Adaptation isn’t a failure, especially when done together as a team.
- Own your commitments
If we expect others to be accountable, we must own our own commitments to operational partners — in other words, do what we say we’ll do, follow through on deadlines, and deliver quality financial reporting. But that’s just the beginning.
We must also understand how to create an intrinsic motivational drive for team members to meet our shared set of expectations. This process can begin by aligning on a common goal and being clear about how each member’s role is crucial for success. We can also boost others’ motivation by sending social signals, such as a sense of relatedness that “we’re all in this together” or fairness that all contributions are equally appraised and valued.
Transparency — in the form of sharing our obstacles and asking for help — is another way to boost intrinsic motivation in our partners. In turn, we must offer our support to help solve others’ challenges. Transparency also involves acknowledging our mistakes and apologizing when needed. When we own our commitments, we build trust with our operational partners.
- Anchor on solutions
At the beginning of the fiscal year, finance leaders often openly discuss financial goals, such as, “This year, we’ll increase profits by 10%.” But even more important than communicating financial goals is creating a solution-oriented culture. What if, instead, we began the year by saying, “What’s one thing we can do together right now to decrease our event marketing costs?” By working together to solve a problem, we can make gradual, consistent improvements that collectively amass great financial rewards.
These ideas are consistent with the Japanese business philosophy of kaizen, which emphasizes continuous improvement involving all employees. Kaizen, the combination of philosophy and an action plan, encourages employees to work together to make incremental improvements. Anchoring on what we can solve together helps align our operational partners with us in achieving optimal financial results.
Anchoring on solutions means encouraging teams to find answers rather than assign blame, which requires an environment of psychological safety and growth mindset. Psychological safety is needed for individuals to speak up about their mistakes — instead of trying to hide them — so the team can help resolve them. A growth mindset, or the belief that mistakes are opportunities for improvement, is required so that everyone views challenges as chances to learn and improve rather than place blame.
Shared accountability fuels organizational success
As a finance leader, the next time you’re told it’s your job to argue for more spending, you can drive shared accountability by saying, “No, it’s our job to make the case.” Then, work through the three-step plan for shared accountability. Think ahead about the risks and benefits while seeking consensus from operational partners. Own your commitments by using their input to prepare multiple investment cases with different risk scenarios. And anchor on solutions by working with your partners through various what-if scenarios of trades you could make if your request for additional spending is denied. Finally, take your case to the CFO or CEO as a team rather than as an individual.
Financial prudence and operational efficiency are best achieved through shared accountability. Although finance teams have long evolved from being only bean counters, we must now embrace and instill shared financial accountability to become fully embedded operational problem-solvers.
A version of this article appeared in CFO News. Read the full article here.
