HR: Sorting out Business Mistakes – Employees and Customers
When you make a mistake at work, do you obsess and then over-react? Maybe you blame others around you. I tend to think about it over a 24 hour period and then usually let it go. I rarely blame others and try to go easy on myself about whatever I contributed to the error or problem. This is partly because of my age and experience and partly due to some great advice I got as a young executive in my first management job.
How you must respond to mess-ups in a business-sense depends upon the interaction of two important factors.
- Relative size of the mistake
- Relative visibility of the mistake to the outside world
Size of the mistake
Calculating the size of a mistake involves a common sense evaluation of right and wrong, ethics, and legality. A breach of confidentiality is generally a pretty serious mistake. It is wrong and potentially illegal. If there is a breach involving employee social security numbers, checking account numbers or dates of birth, it’s very serious. This error can aid criminals in identity theft and fraud. When something is wrong, illegal, and/or unethical, it’s a serious mistake.
A much more minor error might be if a management list of business issues goes to one extra manager who was not supposed to be on a distribution list. Damage control involves having a chat with that one manager. Another minor issue might be an easily corrected math error. Again, correct the error and move on.
Mistakes involving one or two work units are minor. Errors involving the entire company, the company’s most well-know brands and significant numbers of customers will be greater and much more complicated to fix.
The “external judgment” factor
When it’s easy for a casual observer to see how a mistake might be made this is generally a lesser issue than when a company fails to install obvious procedural checks and balances. Most people expect companies to know obvious risks and to do something to prevent obvious errors – such as confidentiality breaches.
Remember when Netflix failed to anticipate understandable customer push back regarding rates after their failed price increase in September 2011. This was a fairly obvious error that might have been discovered/anticipated by market research. Everyone assumes a large company has resources to conduct research and knows it’s important. Then, weeks later, the company made another mistake by separating it’s movie business into two brands. This decision was later reversed. They failed to anticipate a considerable backlash to a price increase and then made things worse by having no comprehensive and well-thought out response. Too much reactive decision-making.
The greater the error, the greater the need for a thoughtful plan to control the damage, create a new plan and amend procedures to prevent this type of error in the future.
Visibility of the mistake
Visibility refers to employees, customers and sometimes to regulators. Mistakes can have low visibility – a few employees got an internal memo they shouldn’t have; or high visibility – a damaging internal memo is leaked to several external clients. The greater the number of individuals outside an organization who become aware of the mistake, the greater the need for external damage control. External damage control can often lead to media exposure. Once media exposure is involved, a very small mistake can take on global proportions.
Here’s a simple guide:
- Small mistake, low visibility – speak to the people involved, change procedures and move on.
- Small mistake, high visibility – notify those involved, change the procedures and prepare for media response
- Large mistake, low visibility – speak to the people involved, change procedures and consider performance couselings for those who are most responsible for the problem.
- Large mistake, high visibility – conduct an investigation, prepare two responses for the people involved and then the media. Step carefully because your response will be scrutinized. Be deliberate, respectful and fair.
Mistakes can lead to deeper relationships
Mistakes create opportunities to improve the company and help employees grow in their performance and skill. If the mistake involves customers, they remember what you did in the face of adversity. Did you overreact and blame them or your employees? Did you fail to admit what happened? Most importantly, Did you disclose mistake’s source or cause and fix it? Customers will understand if you come clean and make it right. Think about the “Tylenol tampering” scandal of 1982 in which Johnson & Johnson took a well-reasoned and honest approach and suffered little long-term damage as a result.
Don’t berate employees
I have seen colossal over-reactions that caused more damage that the original error. Try to stay calm and remember that employees generally want to do their best. The most common source of errors is confusing or inadequate communication. Empathize with employees and hold people accountable only after a good investigation of what went wrong. Don’t be too heavy-handed – make the consequence fit the nature and degree of the problem. And, if your initial reaction was wrong, go back and make amends correcting things you said or did in a reactive mode. Employees will forgive this as well.
An ounce of prevention
Preventing mistakes is so much easier than “un-ringing a bell.” The moral of this story is to pay attention to operational issues. Set up procedures with reasonable checks and balances; train employees in the basics of their jobs; and guide them to have an eye out for the most likely problems that will lead to embarrassment or worst – illegal activities. Be clear in your communication with them on all matters. Then follow a deliberate process to handle mistakes as they arise.
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