Leadership accountability for results within any organization brings about many interesting questions.
- Is your CEO/Leader Accountable for results?
- How do you measure or determine leadership accountability?
- Have you listened to your company’s earnings call lately?
- Is the language used by your CEO/Leader language of accountability or language of excuse?
- Who and what is being blamed for poor performance and why?
- What do you surmise about your CEO/Leader after listening to the earnings call?
Earnings calls are very high stakes and a convoluted message from a CEO/Leaders can be detrimental to the organizations share price. Most of the call is scripted, however, when investors are given the opportunity to ask a question is when the call becomes interesting.
So often do we hear leaders talk about employee accountability. Leaders believe holding employees accountable for results makes the organization better. In the book The OZ Principles, the authors emphasize the importance of Accountability and Responsibility and their importance ingredients to organizational success.
To ensure that every reader fully understands Accountability, here is a definition:
“An obligation or willingness to accept responsibility or to account for one’s actions.”
– Merriam Webster
“In leadership roles, accountability is the acknowledgment and assumption of responsibility for actions, products, decisions, and policies including the administration, governance, and implementation within the scope of the role or employment position and encompassing the obligation to report, explain and be answerable for resulting consequences.” – Williams, Reyes(2006)
In corporate America, the CEO is responsible for the results of the organization.
As we know, the most important result is creating shareholder wealth and often that is achieved by increasing profitability, which should increase the stock price, as well as the value of the organization.
- What happens when the CEO is not producing results?
- Who in the organization questions that Accountability of the CEO?
- How often do shareholders ask the CEO if he is committed to being Accountable and Responsible for the lack of results?
- How does the CEO respond?
One of the easiest ways to check CEO/Leader Accountability is by listening to earnings calls.
For a publicly traded company, these quarterly calls allow the public to hear the language of corporate leaders as they provide the results for the previous quarter. The language will vary depending on last quarter’s results. If the results were positive, they indicate how the business performed against projections and the competition. If the results were less than positive, they provide a list of reasons why the projections were not achieved.
It is the lack of positive results and explanations given that are interesting. Real Accountability or lack thereof occurs during an earnings call when a company’s misses its projections.
When it comes to earnings call and CEO/Leader accountability investors want to hear a straight answer.
If answers provided are murky or vague investors become wary of the CEO/Leaders and the guidance being provided. When the language of the call is complex, investors also perceive the CEO/Leaders as not being accountable for results and intentionally using language that misleads investor as well as being deceptive.
It is apparent that CEO/Leaders must be accountable and responsible during earnings calls. The risk to shareholder value is too high to do otherwise.
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