Creating a Culture of Accountability to the Bottom Line: Sure-Fire Techniques for Success
With financial accountability as something more than just a corporate buzzword or in-vogue practice, it is critically proven that a measure that can make profits swell and bring about transparency in aligning the employees’ efforts toward business goals. Building a culture of financial accountability has real benefits, including increased trust between employees, higher profitability, and more important gains. This article will address employee financial accountability and how to imbue it within your organization.
Understanding Financial Accountability
Fundamentally, financial accountability refers to owning up for actions or decisions regarding finances and being answerable for the outcome. In a business context, it is understood that employees make decisions positively affecting the bottom line while understanding how their work contributes to company finances. Whether it’s waste reduction, resource optimization, or focusing on higher ROI activities, financial accountability allows employees to work in tandem with the company’s financial goals.
Why Financial Accountability is Important
Developing financial accountability within your team is key for a number of reasons:
- Profitability is Increased: Businesses using strong financial accountability processes can realize up to 21% more profitability over those that don’t. This is because, when the employees know that their actions have an effect on the financial status of the organization, they tend to take actions that will promote the realization of the organizational bottom line.
- Improved Transparency and Trust: Financial accountability promotes openness in the organization, and thus the level of trust increases. When an employee knows what the financial goals are and what part he or she plays in it, the person is more engaged and motivated.
- Better Decision-Making: Financially accountable employees are more likely to decide wisely, which results in a more effective workplace and happier employees.
Steps to Encourage Financial Accountability
Regular Communication of Revenue and Retention Targets
Financial accountability is not gained in the dark. Management must clearly communicate to all organizational leaders and members the company’s main business objectives and whether or not those objectives are being met. Ongoing positive or negative updates keep everyone engaged and aligned with the company’s strategic objectives. This open loop of communication makes sure all the employees understand how their efforts directly relate to the financial success of the company.
Goal Tracking and Visualization Tools
Once clear targets have been set, employees need to be given the tools to track their progress. Goal tracking makes people feel like they have control and encourages a results-oriented outlook. For incentive pay teams, applications like Flow Commission provide real-time visibility into earnings and performance to let employees optimize their approach on the fly. For non-incentive teams, gamification and data visualization can be powerful motivational tools, making progress literally visible and engaging.
Align Compensation with Financial Performance
To have employees work toward the financial goals of your company, align their compensation with performance. Such incentives are performance-based through bonuses or commissions and directly tie rewards to the achievement of financial objectives. Another way to look at this type of incentive is profit-sharing programs, where employees receive a part of the profit; everyone is part of the same team that works to maximize profits.
Tell a story with your data using RevOps
One reason RevOps teams bring so much to the financial accountability table is that they excel at translating complex data into insights that anybody can act on. Monthly Business Reviews by RevOps can schedule meetings regularly for communication of financial targets, past performance, and future projections to the entire company. This data is presented in an easily digestible format by RevOps, which empowers the employees to make informed decisions.
Share Budgets and Financial Runway
Sharing the budget of the company, and if available, its financial runway, with employees allows them to make more informed decisions in line with the financial goals of the organization. This has the effect of building trust and encouraging proper financial behavior. Budgeting software and financial reporting tools help make this information accessible and understandable to further instill a sense of financial accountability.
Celebrate Successes and Acknowledge Efforts
Celebrating financial achievements and acknowledging employees’ efforts toward financial accountability is the best thing to keep them motivated. Public acknowledgement of such achievements just goes on to show the importance given to financial responsibility and further assures the bestowal of such responsibility on the concerned party. It also recognizes the ongoing journey of financial accountability for outcomes that may not be perfect yet.
Conclusion
In conclusion, a financial accountability culture is a strategic investment in your organization’s future. Together, these practices, along with the aforementioned—constant communication, goal tracking, performance-based pay, and leveraging RevOps—will build out a fiscally responsible workforce that drives profits, efficiency, and business success at large. Start by taking the actions needed to create a culture where every employee knows and takes ownership of their role in delivering the company’s financial outcome.