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financial crisis

6 Reasons Why Taking Responsibility is Good for Your Organization

by cv harquail on October 22, 2008

responsibility sign In my previous post, Can Taking Responsibility for the Financial Crisis Be Good For You ?,  I argue that taking responsibility is the one thing that you and your organization can do , right now, to improve your organization’s financial future.

When an organization takes responsibility, it shifts how it sees itself. It moves from being a bystander to being an influential participant. In contrast, an organization that doesn’t take responsibility ends up reinforcing its own passivity, leaving it at the mercy of other organizations. An organization that takes responsibility moves itself into the fray and positions itself to make a difference.

Taking responsibility lets your organization take (back) control.

When your organization takes responsibility for its contribution to a bad situation, your organization changes how you (the organization’s members) see the organization’s role in the current crisis and also how you see the organization’s role in creating a better situation. By taking responsibility, your organization shifts itself away from being a victim or a bystander and towards being an influential participant.

Here are 6 Reasons why taking responsibility can be good for your organization, even in a bad situation:

1. Taking responsibility makes action possible.

Organizations that take responsibility move from being impotent to being influential. Organizations that see themselves as influential assume that it is possible to move into a bad situation and change it. In contrast, organizations that believe themselves to be impotent have no reason to even try to make a difference.

2. Taking responsibility sets the expectation, within your organization, that action is forthcoming.

Accepting responsibility for a negative outcome can lead to increased commitment by your organization to do better, because saying you’re wrong sets up a tension to be right the next time.  Have you ever heard someone say they’re sorry without suggesting that they’ll try harder or do something different the next time?  The same is true with organizations.

Within the organization, members recognize that taking public responsibility for contributing to a failure is quickly followed by expectations by outsiders and insiders that the organization will do better in the future. The organization expects to be held accountable by others, and by itself, for trying to do better. The expectation the you’ll be held accountable increases the chance that you’ll at least try to do something.

3. Taking responsibility leads your organization to take a new look at the bad situation that it helped to create, and to understand what and how it contributed to the situation.

By taking responsibility for its part in creating a bad situation, your organization shows that it has recognized that its earlier actions have somehow contributed to the negative result. The organization’s next step is to understand what it did and what it could have done but chose not to do. Being able to see both the road taken and the roads not taken gives the organization a bigger picture of what actions were possible.  organizations take responsibility, authenticity

4. Taking responsibility makes it possible for your organization to learn and creates the possibility that your organization will get it right the next time.

Once it accepts that other actions were possible and that these other actions might have made a more positive contribution, your organization can analyze and understand why it chose the path it did. This builds the organization’s capacity for self reflection and self-understanding. This capacity for self reflection allows your organization to investigate the relationship between its actions, its intent, and the actual outcome.  And, when organizations are able to diagnose why they acted a certain way, they can make changes to their processes so that their future actions take these ‘whys’ into account.  This is called organizational learning .

5. Taking responsibility leads your organization to take more responsibility, and expand its circle of influence .

Organizations that take responsibility for their part in a bad situation can learn from this experience to become more responsible in other areas and at later times.  Taking responsibility in one arena can be the first step towards creating a culture of responsibility.  In an organization with a culture of responsibility, members share the belief that what they do has an impact. This is critical for helping organization members stay motivated and engaged in the organization’s work.

6. Finally, taking responsibility gives your organization the energy to move on to problem-solving.

Your organization knows, deep down, when it is culpable. But, if your organization is denying its responsibility, it is wasting a lot of precious energy– energy that could be better used to make a positive difference.  By giving up its claims of innocence and accepting responsibility, your organization frees up energy that can be used to solve problems, create new opportunities, and even help other organizations.

With regard to the current financial crisis…

… it’s not as though any financial organization’s culpability is in question — there seems to be more than enough blame and more than enough collective collusion to go around at least once. Few if any business organizations can legitimately claim to be without fault. And even those organizations that are less culpable than others still need to move forward and take charge of their future.

Of course, once your organization sees itself (and presents itself) as a participant that helped to create the current bad situation, your organization needs to be prepared to accept blame for what it has done wrong or poorly.  But being blamed seems a small price to pay for empowerment and forward motion that is created when your organization takes responsibility.

Thoughts? Please share in the comments, below.

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Can Taking Responsibility for the Financial Crisis Be Good For You?

by cv harquail on October 17, 2008

girl taking medicine In a word, yes. You’d never know it from the conversation we’ve been having about our current financial crisis, but it’s true: Taking responsibility for your organization’s part in the financial crisis can actually be good for you.

We’ve seen a variety of explanations for what’s been happening, some finger-pointing over who’s to blame, and a few big picture recommendations for taking charge of federal monetary policy. What’s largely been missing is a discussion of how individual organizations have contributed to the crisis and w hat individual organizations can do to repair our national and international economy.

Organizations (and their spokespeople) are afraid of having this discussion, because they don’t want to be blamed. But if your organization is backing away from any analysis of your role in the financial crisis, your organization is not really protecting itself. It is hurting itself. That’s because taking responsibility is the one thing that you and your organization can do , right now, to improve your organization’s financial future. And if your organization works to improve its own financial future, it will help to revise and revive its industry and our economy.

What should your organization take responsibility for?

We all understand that the implosion of our national economy was never predetermined or inevitable. The causes are even more complex than the proposed remedies. Still, it’s clear that actors at every level were part of the problem.

Your organization should take responsibility for what was potentially within its control. This might include taking responsibility for inept oversight, over-expansion, too much debt, extending too much credit, inadequate performance evaluation and training, underestimating risk, failing to learn, pretending your were experts where you were novices, or simply managerial hubris. Nearly every organization did something to contribute to the problem, and every organization can do something to contribute to the solution(s).

guilty dog What does taking responsibility have to do with Authenticity?

An organization acts authentically when it uses ‘who we are’ to drive ‘what we do’, and aligns its actions with its self-understanding. Similarly, an organization acts authentically when it understands how its actions — and the impact of these actions on the organization’s situation– reflect who they are as an organization. An organization that takes responsibility for its actions is acting authentically, because it is taking charge of the link between ‘who we are’ and ‘what we’ve done’.

Acting authentically influences the organization’s external reputation and the organization members’ collective behavior in ways that contribute to financial success.

What does taking responsibility have to do with your organization’s financial future?

How’s this for an interesting research finding:

When compared to organizations that blame external actors and conditions for their negative business outcomes, organizations that take responsibility for their role in creating negative business outcomes have a higher stock price one year later
(Lee, Peterson, & Tiedens, 2004 ).

How does taking responsibility affect future share price?

The impact of a positive reputation. One link between publicly taking responsibility and an improved stock price is how taking responsibility influences an organization’s reputation . Researchers explain that when an organization blames its situation, the organization contradicts all of its earlier efforts to portray itself as in charge of its results. In contrast, an organization that takes responsibility for negative outcomes lives up to its claims of being in charge. By appearing to im didn't do it post it be in charge, just as it claims it is, the organization creates a reputation for itself that, even if it made some mistakes this time, it will take more effective actions the next time.

Bottom line: Whether or not the organization appears to be in charge has a more powerful effect on its reputation than whether the organization always has good results.

An organization that claims to have done nothing to cause a negative outcome can’t be expected to do anything to improve its future situation. In contrast, an organization that takes responsibility and acts as though it can and will influence its future will be expected to do better the next time. And that kind of organization is seen to be more valuable, hence the higher stock price.

The impact of a "take charge" attitude. A second link between taking responsibility and an improved stock price is the impact of responsibility on an organization’s attitude. Taking responsibility influences how the organization’s members collectively understand their role in the current crisis, their organization’s contribution to the current crisis and their organization’s opportunity to do better. Taking responsibility for its situation helps an organization take charge of its future.

When an organization takes responsibility, it shifts how it sees itself. It moves from being a bystander to being an influential participant. In contrast, an organization that doesn’t take responsibility ends up reinforcing its own passivity, leaving it at the mercy of other organizations. An organization that takes responsibility moves itself into the fray and positions itself to make a difference.

If it seems rather simplistic to argue that taking responsibility for contributing to the financial crisis will help organizations get out of the financial crisis, understand that taking responsibility is just the first step . It is a necessary step, though, because taking responsibility shifts the focus of a host of other organizational processes. In my next post, I’ll explain more about how taking responsibility reorients the organization towards assertive, positive action . Stay tuned.

Lee, F., Peterson, C., and Tiedens, L. Z. (2004) Mea Culpa: Predicting Stock Prices From Organizational Attributions, Personality and Social Psychology Bulletin , Vol. 30, No. 12, 1636-1649.

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