End-to-End Executive Accountability. Have you got what it takes to meet the BEAR and FAR requirements?

Every experience you provide, every need you meet, and every value you create is completed by following an end-to-end business process. And yet at the mere mention of the term  “process,” the eyes of some Executives glaze over. It’s easy to spot who they are. They demonstrate a similar reaction when someone mentions the term “Operational Risk” or “Application Performance”.  Thankfully this unaccountable form of Leadership that expects (or hopes) the Chief Risk Officer will deal with their business risks, in the same way they expect the CIO to take accountability for the features and outcomes of their business applications, is coming to an end.  

Customers and shareholders will be pleased to know that there is a new wave of strategic thinkers and leaders who recognise it is their accountability to monitor, manage and improve the end-to-end performance of high impact processes across their organisation. In short, Executives of the future understand that end-to-end accountability isn’t limited to their business silo (organisational structure boundary), and it’s a leadership capability that’s as essential as managing their P&L. 

In Australia to help embed this new standard of Leadership, the bank regulator, APRA, introduced the Banking Executive Accountability Regime (BEAR) based on its finding and conclusions following numerous customer complaints and unreported breach incidents across the banking sector. Shareholders and the public alike were shocked and surprised to hear of the extreme levels of ineffectiveness around end-to-end processes and controls and the resulting in poor customer experiences. While (some) executives had a level of awareness of process performance, risks and controls, this was typically limited within their business unit.   

To improve accountability even further, the Federal Treasury has proposed to replace BEAR with a new Financial Accountability Regime (FAR) which extends the banking accountability requirements to other APRA-regulated entities and their Directors/Senior Executives.  The scope focuses on resolving the “absence of clear end-to-end accountability for product management, which led to adverse customer experiences and outcomes”.  FAR is candid in its intentions and explicitly incorporates end-to-end Executive responsibility requirements that will impose severe consequences for those who fail to perform their roles with competence, honesty, or integrity. 

Significant cultural and behavioural changes are essential to address these requirements, and importantly they will require Executive buy-in with clearly demonstrable behaviours to ensure they trickle down, or rather in this case, cascade like a torrent, through the organisation.   Some organisations will find it challenging to navigate through the conflict of end-to-end ownership and silo operating models; others will struggle to identify that they need to change.  For those who don’t change, shareholders and customers should expect the continuation of inadequate customer experiences, low staff engagement, increasing operational risk incidents, increasing regulatory oversight and without doubt, recurring remediation programs,

Importantly end-to-end Executive accountability is not limited to the Financial Services as it cuts across all industries and geographies. With end-to-end accountability so closely monitored by customers, shareholders and regulatory bodies, many Executives are now seeking out best practice and insights on embedding this leadership capability across their organisation

One model to consider is the Purpose, Alignment, and Governance Model (PAGM). Given the growing expectation Executives are proactively monitoring the quality of outcomes, the performance of risk controls, and the experiences of customers and staff end-to-end, this model is designed to capture the data bottom-up and transform at a strategic level. A critical component of the model is keeping the end-to-end context in front of mind for everyone involved in operating, changing, and managing the end-to-end experiences. 

This enables the accountable Executive to provide direction, support, and decisions to help move the current state towards the desired target state. It’s what I call Conscious Thinking and Conscious Decisioning.  

Get in touch if you’d like help with embedding your end-to-end strategy. It’s not too late to change, but it is too late to ignore. 

2 months ago

Author

danoneill@opextion.com

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