Tag Archive: accountability

Sarbanes Oxley

July 17th, 2015
sarbanes oxley

Meant to protect investors and increase transparency in corporate accounting, implementing the Sarbanes Oxley Act takes some organizational introspection.

The 2002 Sarbanes Oxley legislation (new, enhanced standards for all U.S. public companies) was established in response to high-profile financial scandals (Enron, etc.) in order to protect shareholders and the general public from accounting errors and fraudulent practices. However, implementing SOX in a meaningful way for an organization is far from a no-brainer. A few tips include:

1. Understand your business – what are your key business processes? Understand and document those processes, from the financial risk and control perspective. Do not worry about the rest.

2. Materiality – this is another way of saying, focus on the 80/20. Focus on those areas that have a large potential financial impact on your business.

3. Understand risks – there are endless financial risks in any business. The critical element is to understand which risks are important to your business. Key controls are required for those risks.

4. Understand controls – how does your business mitigate the key risks? What options/tradeoffs exist to mitigate the risks?

5. Think about what makes sense – it is quite possible to throw out strict, irrelevant rules and instead think about what makes sense for your business – what is logical (remember risks, controls and tradeoffs). Then, it is just a matter of putting it into an appropriate communication format for SOX.

6. Evidence – a key word for SOX. Regardless of whether you have the best processes, it might not matter – evidence is the key. In many cases, if you execute effectively in your organization, your processes will not need to be changed. However, it is likely you’ll have to add evidence so that you can prove it to your auditors.

7. Segregation of duties – although logical and part of other aspects of SOX, I’ve given this a separate bullet point because it is often one of the more challenging aspects for smaller, flexible organizations to achieve. Remember, logic works so long as it is backed by evidence!  

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Risk – Take it or Leave it?

September 5th, 2013

In today’s new normal business, prudent risk-taking can pay off greatly for your company.

Risks abound in today’s market!  Products are stolen during transit.  Natural disasters occur.  Political conflicts arise.  Ports go on strike.  Securing information is no longer easy – or inexpensive.  Customers go out of business.  Investments often don’t deliver the expected results.  Yet successful executives still take on risk!

Why?  Let’s talk about those who do not have the appetite for risk.  In my experience in partnering with executives across multiple industries, geographies and company size, I find that those who are unwilling to “make critical decisions” and “take on prudent risk” ultimately fail.  In today’s new normal business environment, volatility is the norm and you must be differentiated / have an edge over the competition to thrive.  Standing by and waiting until its “safe” to move leaves you in the dust.

Is it radical to recommend building an appetite for risk?  NO – assuming you build your appetite for risk, backed with solid decision-making skills. In today’s environment, there is more data available than ever before.  The key becomes how to summarize and categorize data into information required for decision-making (to evaluate risk).  Next, it is important to turn that information into knowledge with practical application in a way that will elevate your business performance.

So, why increase your appetite for risk?  First, two points of clarification: 1) Risk for the sake of risk makes no sense (it’s a form of gambling). 2) Risk that even blurs the lines of integrity is unacceptable. Aside from this foundation, building your appetite for risk makes sense if the risk correlates to an improved end result – a return on investment, improved condition for the people involved, etc. For example, if you are evaluating businesses to purchase, you’d never purchase a business that contained zero risk because the cost would be prohibitive. Instead, often times, business opportunity comes by taking on the “right” risk.

The key is to understand potential risks, the probability of occurrence, the potential seriousness of impacts, and evaluate these risks in relation to the expected returns. For example, a client recently took on the risk of bringing in materials and producing goods prior to confirming sales orders.  It seemed radical given the prior risk-adverse culture; however, they were able to dramatically increase service levels and increase margins as a result.  Of course, they managed risk – instead of bringing in “extra” materials, they put together a demand plan based on history, sales input and with key customer collaboration to increase the probability of success.  Prudent risk paid off!

Increasing your appetite for risk is not for the faint of heart – and requires persistence. Take a step back and think about the risk-reward options. If it makes sense, proceed. Gather data, ask questions, develop options (alternatives for your decision or project), and act. The rewards will be staggering.

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What Does it Take to Have a Real Team?

August 19th, 2013

Build successful teams that are cohesive and self-improving.

It’s rare for significant results to be achieved by individuals in today’s economy; teams have substantially greater success.

What do good ones have in common?

1.   One clear purpose — Typically, a team has one purpose since it’s formed specifically for that purpose. However, is your purpose or reason for being clear? The best teams are crystal clear on where they are going and why.

2.   One objective — A foundational element of a team is that there is an overarching objective -what do you expect to accomplish? If each person has a different objective, you don’t have a team; you have a committee.

3.   One measuring system — Can one person succeed while another fails? If so, you have a committee. Instead, a true team will succeed or fail together with common metrics.

4.   Accountability — Your team should share accountability for achieving your objective. Who is responsible for which action items? The best teams are self-selecting – if someone isn’t holding up their share, it is addressed (often the person improves with peer pressure or self-selects out).

5.   Rewards — Certainly, one of the best aspects of having a team is to celebrate success and to create a feeling that you are “in it together.” Thus, it is critical to celebrate progress and success.


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Organization Essential to Strategic Focus

August 8th, 2013
Order from Chaos with Lisa Anderson, LMA Consulting Group

Bring order to chaos – organize and redefine your priorities.

Organization is one of the key tenets required to be successful with an eagle eye strategic focus so that you can rapidly assess strategic priorities. I’ve yet to run across an organization with just the right amount of priorities – have you? Here are a few strategies to improve your organizational abilities:

1. Keep lists – don’t get caught up in the latest techno gadget on how to track your to-do list; instead, just make sure to keep a simple to-do list. If your list is long, put a star by the items required immediately. I find it to be simple yet invaluable.

2. Keep a calendar – again, it doesn’t matter whether it is a piece of paper or on a cell phone – each will work effectively or become a total waste, depending on how it’s used. I prefer using a calendar on my phone; however, I’ve found it depends completely on the person as to what is most effective.

The most important factor is to keep your calendar updated and accessible. Do not over-schedule your time – add time between appointments, for breaks, etc.

3. Categorize – One way to organize is to find ways to categorize – develop categories and use them as it makes sense for grouping like-items together for quicker and more efficient decision making and follow-up. For example, consider storing your documents by the project, type, follow-up date etc. – choose a method that works for you.

4. Make it visual – one of the concepts of lean is also critical for organization – making it visual. Contrary to popular theory, consider NOT putting all your papers away in files/ drawers. As soon as I put something away, it’s forgotten. Instead, prioritize and keep at least the upcoming, critical priorities with associated paperwork in clear sight. Track progress visually as well.

5. The environment – yes, it is true that a clean and well lit environment is more conducive to success. There is no need to go overboard though – focus on your environment to the degree that you can find what you need when you need it. And, it might be surprising but good lighting can make a huge difference.

6. Accountability – as usual for achieving success, create an environment of accountability.