With ethical challenges on the rise employee accountability is more important than ever before! And while employers understand that holding employees accountable for their actions at work is a key component of risk mitigation, they often struggle with how to achieve accountability in a way that’s financially responsible, ethically sound, and operationally sustainable.  

If you’re feeling overwhelmed thinking about how to shore up your accountability efforts, we have some helpful tips to share with you to reduce risk and improve business outcomes. Remember, effective accountability is achievable for all organizations regardless of size, budget, workforce, or industry – so let’s dive into the year’s most important accountability initiatives!

Achieving Accountability

Every organization should utilize strict internal accounting controls to mitigate risk. There is no excuse for lax or missing internal controls measures because they are not expensive to implement and maintaining them is considered a standard responsibility of any accounting or finance role. Nancy Smith elaborates the importance of internal controls in saying,

“Hiring an accountant with integrity and expertise is not enough to protect your business, and it is naïve to simply think that it will be good enough to find someone with the right experience. I cannot understate the importance of solid internal controls, especially these days as business fraud and cybercrime are on the rise.

Having strong internal controls in place communicates your commitment to ethical and accurate accounting processes, protecting you from shady practices both internally and externally. Solid internal controls put up a wall to deter unscrupulous behavior and defend the company if something goes awry.

If your accountant pushes back on implementing and maintaining internal controls, this should immediately raise a red flag because these types of controls can protect accounting staff as much as the overall business. Therefore, your accountant should not only be okay with having internal controls in place but insist on it!”

Her assessment is spot on. We see examples every day of times when internal controls weren’t utilized, and companies paid the price! In fact, a colleague of ours recently told us about a situation where a member of their leadership team fell victim to a cyber scam because he didn’t properly vet an offer that came through to him. Not only was he affected, but he passed along the threat to the rest of the company’s staff and its partners when he shared it without getting the proper approval to do so. Thankfully, the security breach he created was fixed quickly so the criminals didn’t get access to any assets. However, the headache it caused internally and the brand damage that was done externally was significant enough that the executive responsible was terminated. Trust was broken and regardless of who is in the role next, the company now has a long road ahead of it to rebuild that lost confidence.

Internal controls that can prevent these kinds of messes are not just reserved for large corporations. In fact, accounting controls are especially important for small and mid-sized businesses and nonprofit organizations where trust is most likely to be exploited. Basic internal controls for any organization should include (but are not limited to):

• Segregation of duties
• Required authorizations and approvals
• Digital and physical access controls
• Regular bank and credit reconciliations
• Periodic asset audits
• Standardized financial document templates
• Routine data backups

Even with these types of internal controls in place, some organizations feel they need to go further by doing more. As a result, some companies are exploring the idea of tracking what employees do and how they work. One accountability approach that has garnered attention lately along these lines is employee monitoring. However, the attention has been overwhelmingly negative for major companies that have tried to implement new employee monitoring initiatives! Before going down this path, leadership should strongly consider both the tangible and intangible costs associated with pursuing this kind of approach because the general consensus among employees is that virtual monitoring is invasive and demonstrates a lack of trust from management, which can hurt employee morale and encourage turnover. Additionally, some types of employee monitoring like video surveillance can raise serious ethical concerns around privacy that may have legal implications as well.

Planning for Success

The CFO is responsible for ensuring that the organization is utilizing its assets effectively to generate the greatest return, and employees are no exception! Therefore, accountability initiatives should not only ensure that employees are acting in a way that protects the business but also propels the business forward. All accountability initiatives should be evaluated through this lens. CFOs will need to ask questions like:

• What kinds of results do key stakeholders want to see?
• Which initiatives are the right fit for the organization’s specific needs?
• What are the implementation costs of these initiatives?
• How will they mitigate risk?
• How will they increase productivity?
• What kind of effect could they have on workplace morale or turnover?
• Will they affect public perceptions of the organization?

These are the kinds of questions that must be considered when evaluating accountability approaches, which means that your CFO needs a seat at the table as these kinds of decisions are made.

When you need consulting CFO services, we can help! Our team of seasoned CFOs has the experience needed to come alongside you to offer advice on how to achieve greater accountability to not only protect your organization but also propel it forward! Find out more about our outsourced CFO services today! Contact us today for a no-obligation complimentary consultation to discuss your needs and business challenges.