HR Pros – 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. When I make a mistake, I tend to think about it over a 24 hour period and then usually let it go. I’m more apt to consider what I might have done wrong than blame others. I always want to correct things right away and am apt to confess the mistake early on. 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.

In reality, a company’s business response to mess-ups depends upon the interaction of three important factors.

  • Relative seriousness or size of the mistake
  • The nature of the mistake – routine business matters vs morality and ethics
  • Visibility of the mistake to the outside world

Seriousness of the mistake

Calculating the size of a mistake involves a common sense evaluation of an average person’s assessment. A breach of confidentiality is considered both preventable and a serious mistake. It is wrong, potentially illegal and will be covered by the press if the company is of sufficient size or influence.  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 would be the wrong time or date listed for an event on a press release. Yes it might result in public confusion but it can easily be corrected with a second notice. As long as the event has nothing to do with ethics or legal matters, it’s not that serious. Damage control involves making sure the corrections reach the intended audience and ensuring employees responsible for such notices are counseled on verification and review.

Mistakes involving one or two work units are minor.  Errors involving the entire company, the company’s most well-know brands or significant numbers of customers will be greater and much more complicated to fix.

Nature of the mistake – morality and ethics

Another serious mistake or breach of morality is treating employees unethically or overtly discriminating against under-represented groups. Ongoing sexual harassment behavior with coverups is serious and implies you knew what you were doing was wrong. This type of error is often siezed upon by the press and exploited for clicks. The average person will put themselves in the victim’s position and judge you harshly. The response to these errors are beyond the scope of this blog on “mistakes.”

The “external judgment” factor

When it’s easy for a casual observer to understand that small mistakes happen, 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.

Error Frequency

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 important 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 greater risk and importance.

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 three responses for the employees, victims or customers involved and the media. Step carefully because your response will be scrutinized. Be deliberate, respectful and fair.

Correcting mistakes leads 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 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 general public has an increasing sense of when employees are being used as scapegoats. 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 remember that you fessed up and the chance of forgiveness for the original overreaction is greater.

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 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.

(c) Copyright Benoit Consulting, LLC 2012 all rights reserved

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