How Accountability Could Have Saved PwC from Losing a £15 Million Contract.
It’s no recent news that BT’s Italian accounting scandal has caused the telecom company’s share value to drop by £8 billion and left 4000 staff unemployed.
PwC’s inability to identify the problems at BT Italia means that in 2018, the accounting company won’t be looking through BT Global’s books for the first time since their IPO 33 years ago.
It’s known that improper accounting practices and a complex set of sales, purchase, factoring and leasing transactions were what caused the overstated profits from BT Italia – but why couldn’t the accounting conglomerate identify those issues?
What Caused PwC to Slip Up?
In a world where the largest businesses are often perceived as ‘too big to fail’, a similar trend has been found whereby those companies tend to have a lack of accountability for task performance.
When a company hires new employees, the complexity of that organization spreads exponentially. Communication chains grow longer and longer, reaching a point of reticence.
This is the point whereby lack of communication along the chain affects management from their ability to effectively follow up on a task – almost as if that task is now invisible to be followed up on.
Accountability Is the Solution for Organizational Complexity
When employees are held accountable, and a system that clearly monitors and rewards performance against expected outcomes exists, a higher sense of responsibility flows through an organizations culture.
Learn more by downloading our Ultimate Guide to Accountability in the Workplace here:
No Firm Is Too Big Too Fail
According to PwC investors Royal London Asset Management, “The announcement from BT surprises us on a number of counts. Firstly, BT is a strong company with a relatively predictable business and so not generally prone to these kinds of warnings. Secondly, given the modest scale of the Italian business, the magnitude of the hit it has caused is concerning.”
Enforcing accountability ensures that things get done. A High Performance Organization (HPO) cannot exist without it. Risk mitigation follows.