Admitting to a mistake or taking accountability for a business’s poor performance is not a favourable position for any CEO.
The study focused on whether leaders attributed company and quarterly performance to outside factors such as economic shifts and supply issues or if they attributed performance to internal factors like leadership and decision making. On the other hand, when a company performed well, the way that CEOs explained this performance did not have a significant impact on analyst forecasts.
“Leaders avoid being accountable for failures because they feel like it’s a risk or a potential danger. But observers actually view leaders who are truthful, accountable and transparent more favourably,” said Skarlicki. “We were also excited that we could actually quantify the financial payoff of integrity, and the bottom line is that accountability matters. Deflecting responsibility can be a bad strategy.