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Rio Tinto’s Board Demonstrates Accountability, But Was It Too Late?
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Is your board setting the tone for truly accountable leadership?

Rio Tinto’s Board Demonstrates Accountability, But Was It Too Late?




BIG IDEA:

A company’s board should be more than a last line of defense.

Is your board setting the tone for truly accountable leadership?

Gut Check for Leaders

When things go seriously wrong at a company, it often falls to the board to step up and hold the CEO accountable. But a board that is doing its job should be more than a last line of defense. A company’s board should be proactively setting the tone for a culture of leadership accountability throughout the organization.

WHY IT MATTERS:

Weak leadership accountability is a serious business risk.

Poor leadership accountability creates enormous risk for a company. A lack of accountability ripples throughout an entire company, weakening every team and every department.

Companies with weak leadership cultures often fail to execute on their strategies. They may struggle to attract the best talent—nobody wants to work in an organization where mediocrity is tolerated. Nobody will push themselves to do their best if they see their colleagues getting away with minimum effort.

Ultimately, the reputation of a company with a weak leadership culture will always suffer, whether because of unethical actions on the part of leaders used to cutting corners, or because of weak performance and a lack of innovation.

THE RISKS:

Rio Tinto’s explosive problem

Rio Tinto made a massive misstep when it decided to destroy ancient Aboriginal rock shelters that have great cultural and historical significance. But the company’s problems didn’t stop there.

When the board initially conducted a review of the decision, they decided only to cut the bonuses of some senior executives, rather than firing anyone. Not surprisingly, this decision was seen as not going nearly far enough. Investors ultimately forced out the CEO and other top executives.

Now the chairman of the company’s board is stepping down as well. I suspect the board will also do some soul-searching to ensure that the culture of accountability at the company starts with them. Most likely, they will come to realize that they could have done more to hold leadership accountable for this tragic decision, and they will need to do more going forward.

WHAT TO PAY ATTENTION TO:

Is your board stepping up?

There’s a lot boards can do to create a culture of accountability, but it all starts with reframing the board’s understanding of its role. Boards should see themselves as leaders of the organization, and think about accountability when hiring a CEO and recruiting new members.

In my book, Accountable Leaders, I outline 5 things boards can do to create a culture of accountability:

  • Hire a CEO who is an accountable leader.
  • Encourage the CEO to be accountable for leadership accountability.
  • Recruit new directors to the board who are committed to being accountable leaders.
  • Ensure the board has a director with solid HR experience. Many boards struggle to fully appreciate talent, leadership and HR issues, as they typically do not have a director with depth and expertise in these areas.
  • Ensure the board sets the tone for the rest of the organization.

Is your board setting the tone for truly accountable leadership?

Gut Check for Leaders

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We have many resources to help you become the most accountable leader you be, develop accountable leaders on your team, and scale leadership accountability across your organization.

Signup for our upcoming webinar, join our online community of accountable leaders, or buy Dr. Molinaro’s, latest book, Accountable Leaders, on Amazon.