These three terms are critical pieces to the puzzle of achieving results at the board level. And while there are similarities between the three, there are distinct differences in their definitions and application that are important to understand if you’re to utilize their power effectively. Let’s start with a few definitions from Merriam-Webster:
- Responsibility: Something for which one is responsible; the state of being responsible
- Authority: Power to influence or command thought, behavior or opinion
- Accountability: an obligation or willingness to accept responsibility or to account for one’s actions
In reading the definitions, it’s easy to see why these words are so easily confused. However, understanding these terms, and how they work at the board, ownership and management level is important if you’re to get the greatest value from your board – and ensure the long-term performance benefits everybody.
Authority vs. Responsibility
In organizations that have a board of directors, authority comes from the top down and responsibility comes from the bottom up. Seeing this play out, you’ll have a board of directors responsible for making and enforcing decisions for the company – and then handing those decisions down to the management/executive level to carry out. Not only is the management team responsible for executing upon those decisions, but also for keeping both ownership and the board of directors informed about their progress.
If you work with a board of advisors, keep in mind that while they can create an environment that encourages authority and responsibility, it doesn’t actually carry the authority of a board of directors. Instead, authority sits with the company owner.
We’re All Accountable
Accountability is where the rubber meets the road. This is making sure everything gets done effectively: were the decisions implemented correctly? How well was it done? Did we achieve our goals?
So while authority and responsibility start at different ends of the organizational structure, accountability sits with everyone. At the board level, accountability means being able to admit – and offer solutions - when a bad decision was made. On the management side, it refers to the ability to communicate effectively with ownership and adjust as needed to deliver results. If they anticipate missing the mark, for example, management should have a clear plan in place to get back on track.
Boards bring a new level of accountability to the organization and I’ve seen how impactful they can be when they’re utilized effectively. Having a board brings the organization to a new, higher level - and that’s something that benefits everyone.