How do you recognize the difference between an employee’s mistake that educates and informs and trains, versus a mistake that should lead to an employees dismissal?
Transcript
Steve Rice: What do you do when somebody that works for you does something really bad? How do you handle that?
And specifically, I’m thinking of the story I heard – I think it was the CEO of Intel – somebody had made a mistake that cost, I think, a couple million dollars. And all of the people on the executive team, or that we’re working with or in charge of this person, looked at the CEO and said, “This guy just made this huge mistake. Why don’t you get rid of him?” And he said, “Look, it just cost me $400,000 or a million dollars to train that person never to do that again. So why would I want to get rid of him?”
Stephen Sendar: Exactly!
Steve Rice: On a more-closer-to-home experience, I had a very similar experience that Stephen knows very well. I left on vacation and had lined up all the buying plans and the team to be in charge of those buying opportunities while I was away. And the manager, after meeting with the consultant that I had hired to set the budgets for the departments, went and ran a couple of reports. And in a freak-out moment thought that we were $40,000 under stock. And he didn’t realize that he’d run the report wrong. And he didn’t really double check with anyone. And he went and bought $40,000 wholesale worth of stuff.
And for a company that, in the heat of summer, only has $240,000 of inventory, that’s a pretty significant amount of stuff to be sitting around. So I came back from Europe and ran an inventory report and was like, “Holy Shnikeys! We’ve got $80,000 more in retail, but our sales are up right now by 6% last month and 18% this month. And our margins have been way up. Where did all this stuff come from?”
And then when I figured out what it was, I walked into the room with this very sheepish manager – sheepish isn’t even the right word – ‘Hangdog’ was the look on his face.
And he just said, “Am I going to get fired?”
And I said, “Well, let me ask you this. Are you ever going to do that again?”
And he said, “That’s a mistake I will never make.”
And I said, “Well, which mistake are you thinking of?”
And he said, “Well, it was a couple ones. First of all, we had some well paid advisers who were telling me what to do, and I didn’t heed their advice. And then I ran reports and saw an anomaly, and I didn’t talk to anybody. And then I followed up on that. So there’s really three mistakes.”
So I said, “That’s great. You know, here is what’s true. I’m not going to fire you because you just learned something and we’ll figure out a way to recover from it. And, let’s be honest. If it does happen again, then we’re going to have to have a different conversation.”