What’s the Real Cost and Who Can Fix It?

Last time I mentioned the six areas, per a Culture.io article, that are impacted when team members aren’t held accountable. I won’t hash out all of those here but I will touch on some very specific costs I’ve seen related to just two of those…

A disengaged workforce, according to a Harvard Business Review article I referenced in detail a while back in Why is Employee Engagement Important, can impact productivity in an organization by as much as 22%. Having seen just how much effort goes into improving productivity by even 5%, that tells me a company with poor engagement is missing out on a ton of profitability!

And turnover is always a significant expense, even when we’re just talking about the national average. That said, I’ve seen organizations where this kind of lack of accountability is the norm and turnover ends up being more than double the average. If you’re not familiar with just how much those costs, even for companies with average turnover, I cover that in detail in The Importance of Employee Retention. 

If we only consider those two areas, without even digging into the other four pitfalls I referenced before, we’re still talking about big bucks! I won’t pretend to speak for you here, but I certainly can’t name a single supervisor, manager, or business owner who would consciously allow that kind of money to be flushed down the drain once they realize what’s causing it! 

So why does it happen so often? And who’s responsible for fixing such a massive problem?

First, let’s talk about Who… I am, you are, and so is basically every other individual we interact with on a daily basis! For now, I’m not concerned about your role or title. We should each take complete responsibility for our own performance. Once we’ve done that, it’s far simpler (but not necessarily easier) to hold others around us more accountable. For those of us who do hold formal leadership responsibility in our organizations, this is even more important. We’ll look at that in more detail soon. For now though, here’s something I found detailing how much allowing a lack of accountability impacts a leader’s credibility in an article called Lack of Accountability in the Workplace is Expensive, Fix It:

Research tells us that strained relationships cause 60-80% of organizational challenges and up to 30%-40% of a leader's time is then sucked into the vortex of trying to navigate through all these challenges. It translates into negative energy and a waste of valuable time. Leaders who refuse to understand this succumb the entire company to existing day-to-day in a cesspool of drudge. Everything becomes more laborious to do, mutual problem-solving is at a low level, decisions slow down, and more. In the end, the company has a damaged reputation (internally) and leadership loses respect. Morale is low. As a leader, it’s your job to create an environment in which everyone should come to work every single day and do what they do best. Learning how to lead people toward higher levels of accountability is a key to company renewal. Where should leaders, then, be strategically spending the bulk of their time?

To this point, everything I’ve referenced has been with regards to the internal costs a company faces from a lack of accountability. But it absolutely impacts our customer base too! I could go into a very detailed example of a recent scenario where Cindy and I switched providers of a specific service because the people in the business weren’t being held accountable but I’m sure you have more than a few of your own examples. That being the case, I’ll wrap up for now with some stats I found in a LinkedIn article about The True Cost of Losing a Customer. When a customer leaves due to poor accountability, the business not only loses immediate revenue but also what that customer would have likely spent there over the course of their lifetime (often called the Customer Lifetime Value/CLV). The author goes on to explain that the costs of losing a customer don’t stop there. He suggests that losing one customer typically results in a loss of 18 times the amount that one customer spends - through negative word-of-mouth alone…

OK Wes, it’s a big deal… What can we do about it? Personal accountability is a great starting point but it won’t likely be enough so we’ll start looking at what else needs to happen next time!