Accountability

Accountability

Achieving sustainability constitutes one of the fundamental goals that business organisations pursue. Nevertheless, the quest to achieve the intended success, such as high profitability, may lead to a conflict of interest between different internal and external stakeholders.  Christensen and Laegreid (2015) assert that ‘when managers focus on outcomes such as high profit, it is hard for them to be accountable’ (p. 212). This accentuates the need for accountability amongst businesses. Lewis, O’Flynn, and Sullivan (2015) define accountability as ‘the obligation of an individual or organisation to account for its activities, accept responsibility for them and choose to disclose the results in a transparent manner’ (p. 401).   Thus, the purpose of enacting the concept of accountability is to entrench ethics and values amongst different stakeholders. The significance of accountability in achieving organisation’s success is underlined by the progressive integration of the concept of corporate governance. Therefore, in its quest to achieve long-term success, it is imperative for HSBC Holding Public Limited Company to focus on entrenching the concept of accountability as one of its corporate governance elements. To accrue the benefits associated with the concept of accountability, HSBC’s management team should consider integrating accountability as one of the elements of its organisational culture in order to transform itself into a high-performance entity as opposed to a managerial aspect (Bustin 2014).

In the course of its operation, there are a number of areas that HSBC Public Limited Company should be particularly concerned with. One of the critical issues that the firm’s management team should take into consideration entails ensuring environmental accountability, which emphasizes the need for organisations to ensure that business’s operations do not affect the environment negatively (Mason 2012). In their quest to maximise profitability, business managers are obliged to ensure that their operations do not contribute to environmental pollution. This calls for managers to be accountable for ensuring that all the business operations are environmentally conscious. HSBC is committed to establishing a balance between its operations and the environment in order to achieve sustainable performance.

In addition to the environment, the concept of accountability further entails ensuring that businesses contribute to solving the prevailing social problems. One of the ways through which businesses can solve social problems entails providing employment opportunities for the society within which they operate. This means that businesses should not only focus on maximising profitability by exploiting society’s resources at the expense of the local community. On the contrary, business managers should ensure that their organisations are accountable for eliminating poverty.

The concept of accountability further requires organisation’s managers to ensure internal accountability. One of the categories of stakeholders that organisation’s managers should be accountable to entails the shareholders. Browning (2012) emphasises that managers act as agents while the stakeholders are the principal. As the principals, investors expect the managers to ensure that their investment is optimally utilised. Thus, the agency relationship established between the manager and the investors is based on accountability. In entrenching accountability, managers at HSBC Holding should ensure that their decisions on organisations operations are not in conflict with the investors’ wealth maximisation objectives. Therefore, managers should establish a balance between the shareholders’ wealth maximisation objective and their need to ensure that organisational profits are maximised. Achieving this outcome calls for managers to ensure a high level of accountability.

In spite of the benefits associated with accountability, some critics are of the view that achieving accountability increases the cost of operation. For example, to succeed in achieving environmental accountability, business managers are obliged to adjust their operational practices, for example by entrenching efficient means of production.  With reference to the elimination of poverty, Mollison (2016) asserts that businesses are not entirely responsible for social problems, and those they do not have the requisite skills to eliminate the prevailing social problems. Despite the fact that pursuing the element of accountability may increase the cost of operation, the benefits significantly outweigh the cost. Accountability contributes to remarkable improvement in an organisation’s profitability. For example, by being accountable to the society in which it operates, the reputation and public image of the organisation are improved.

Entrenching accountability as one of the fundamental components of organisational culture will have a positive impact on the HSBC Holding manager’s quest to enhance long-term organisational success. Failure to entrench the concept of accountability in the organisation’s operations will not only affect the organisation in the short term for example reduction in profitability but may also affect the firm’s sustainability. Thus, managers at HSBC should ensure that a holistic approach is entrenched in the concept of accountability.

References

Browning, H 2012, Accountability; taking ownership of your responsibility, Routledge, Mason, Ohio.

Bustin, G 2014, Accountability; the key to driving high performance culture, McGraw-Hill Education, New York.

Christensen, T & Laegreid, P 2015, ‘Performance and accountability; a theoretical discussion and an empirical assessment’, Public Organisation Review, vol. 15, pp. 207-225.

Lewis, J, O’Flynn, J & Sullivan, H 2015, ‘Accountability; to whom, in relation to what and why’, Australian Journal of Public Administration, vol. 73, no. 4, pp. 401-407.

Mason, M 2012, The new accountability; environmental responsibility across borders, Routledge, New York.

Mollison, R 2016, Can business solve social problems. [Online].

Robins, R 2015, Does corporate social responsibility increase profits. [Online].