How To Handle The Occasional Oop-See!

Q: My company is really in hot water with one of our best customers. I can't reveal exactly what happened, but suffice it to say that we really dropped the ball and the customer is furious. I'm not even sure we can save the account. What's the best way to get back in a customer's good graces after making such a mistake?
-- Charles W.

A: Without knowing the full story, Charles, I can't give you a specific course of action, but let's start at the sharp end of the uh-oh stick and work our way back to see if we can come with up some advice that might help.

First off, it's important that you understand that the magnitude of your mistake will determine the course of action you take to make amends. If your company's error was such that it caused your customer a significant amount of lost time or revenue, embarrassed them publicly, caused damage to their reputation, or otherwise negatively affected their bottom line, you may face legal repercussions that saying "I'm sorry" will not deter. If that's the case you should consult an attorney immediately and prepare for the worst. Whether or not the worst comes is irrelevant. You must be prepared for it.

Now on to dealing with more minor offenses. As anyone who has read this column for any length of time knows, I'm cursed with daughters. I used to say I was blessed with daughters, then they learned to walk and talk. Blessed quickly became cursed. Now my oldest daughter is an inch taller than me and getting all lumpy in places I'd rather not think about. She's a sad case, really. The poor kid needs an operation. She has a cellphone growing out of her ear. But I digress?
When she was a toddler she coined the phrase, "Oop-see!" Whenever she did something innocently destructive, like knock over a glass of orange juice on my new computer keyboard or shove a Pop Tart in the VCR tape slot, she would look at me with her huge brown eyes and say, "Oop-see!" My wife says there is a reason God made kids cute. Oop-see moments are evidence that she is right.

Oop-see meant, "Uh oh, I didn't mean to do that. I was wrong. I'll never do that again. Forgive me? Love me? Buy me toys?Oop-see worked like a charm every time. Now, I certainly don't expect you to bat your eyes at your customer and say, "Oop-see!" but consider the effect her words had on me. Instead of screaming at the top of my lungs like I wanted to do (hey, have you ever tried to dig a Pop Tart out of a VCR) I immediately softened and found myself actually taking her side. "Aw, it's OK, really, we all make mistakes?

What my daughter had figured out is that it's hard to stay mad at someone who admits a mistake, sincerely apologizes for it, and vows never to let it happen again. Little did I know this was only one of many tactics she would employ over the years in her never-ending quest to wrap her daddy several times around her little finger, but that's a whole different column.

Dale Carnegie said it best: "Any fool can try to defend his or her mistakes - and most fools do - but it raises one above the herd and gives one a feeling of nobility and exultation to admit one's mistakes."

Carnegie and my daughter were basically saying the same thing: When you (or your company) make a mistake, no matter how large or small, the best thing you can do is quickly admit the error of your ways and face the consequences, come what may.

Here are a few things you can do to help set things right with your customer.

Assemble the facts. The very first thing you should do is find out what went wrong and why. Meet with your key people and gather the facts. Ask specific questions like: What was the mistake? What caused it? Who was involved? What could have been done to prevent the mistake from happening and what can be done to prevent it from happening again in the future.

Put yourself in your customer's shoes. I've been on both ends of the uh-oh stick and neither is very comfortable. My company has dropped the ball on occasion and we have also been negatively impacted when one of our vendors did the same. Put yourself in your customer's shoes and consider what could be said or done to remedy the situation from their point of view.

Take responsibility for the actions of your company. In my role as a company president there have been times when I've had to call up a customer and confess that a mistake was made, and as president it was also my responsibility to take the heat for it. Remember, you're the head cheese, Charles, you get to sit behind the big desk and take home the nice paycheck. You're also the one that gets to mop up when your employees makes a mess. It just goes with the job.

Do not place the blame on specific employees. No matter how tempting it is to put the blame on specific people in your organization (even if that's where the blame lies), do not do it. It is unprofessional, counterproductive and can backfire on you, especially if the person you're blaming reports directly to you. Saying something like "My sales manager is always making mistakes like this!" is not going to make your customer feel any better. To the contrary, such statements will make the customer question your leadership ability and the quality of all your employees, not just the one that made the mistake. If you don't have faith in your company and employees, why should your customer?

Don't deny that a mistake was made, especially when there is clear evidence to the contrary. You're not Richard Nixon, for petesake, so don't try to pretend that the mistake didn't happen or stage some elaborate cover-up to try and dodge the blame.

Admit your mistake. This may sounds trite, but you must admit your mistake before you can move ahead and start to make amends. Don't be so afraid to take this step. I doubt your company is the first one to screw up with this customer and I can guarantee you certainly won't be the last.

Apologize for the mistake. The one thing that could make the situation better is often the thing that companies find hardest to do. I don't mean to sound like Dr. Phil, but simply saying you're sorry is often the best way to get a business relationship back on track. Ensure the customer that it will never happen again. After you have taken responsibility for the mistake and apologized in a sincere and professional manner, you must then start the process of rebuilding the trust that was lost. Promising that such a mistake will not happen again is a good way to start.

Compensate the customer for his loss. Even if your mistake didn't cost the customer a dime, he will appreciate an offer of compensation. This can be something as simple as a lunch on you or a discount on his next order. The size of the compensation offered should be in direct proportion to the size of your mistake. A word of warning: don't let the customer bully you into overcompensating him for your mistake. That can be more detrimental to the relationship than the mistake itself.

As my daughter understood all those years ago, Charles, a sincere Oop-see can help make things all better.

Here's to your success!

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Finding The Right Expense Management Solution For Your Company

In recent times, initiatives such as the Sarbannes Oxley Act in the US have dramatically raised the profile of compliance within the corporate world. As a key element of any corporate compliance policy, expense management has shared some of the limelight. As a result, an Expense Management Solution (EMS) is now critical to any business concerned with corporate compliance. But what is an Expense Management Solution (EMS)? Does your company need one? And where do you find a good one? Just as importantly, how do you successfully implement and integrate an Expense Management Solution (EMS) into your corporate environment. This article sheds some light on these issues.

What is an Expense Management Solution (EMS)?

The term 揺xpense management solution?has been used to describe quite different commercial products and services. In the context of this article, an expense management solution is defined as a technology based system that processes:

(i) transaction records received from a credit card issuer (detailing employee use of corporate credit cards0; and

(ii) cash reimbursement claims originated by an employee.

In practice the target application is Travel and Entertainment expenditure. A robust Expense Management Solution (EMS) will also support procurement (pCard) activities as part of a broader strategy of effectively managing lower value, high volume business-to-business transactions.

The three core steps of any expense management process are:

1. the acceptance/input of validated source data;
2. the application of predetermined rules of handling expense records; and
3. the posting of transactions to a corporate repository such as an ERP system.

What is the purpose of an Expense Management Solution (EMS)?

The objectives of an expense management solution implementation should include the following:

1. to automate the preparation, submission, approval, and auditing of travel & entertainment claims, thus improving the productivity of account holders and reducing the time and cost of accounts staff;

2. to support the implementation of a standardized best practice method of managing high volume expenses through the use of corporate credit cards; and

3. to increase the transparency and enhance the governance of financial transactions conducted on behalf of the enterprise.

Sources of Expense Management Solutions

Australian and international organizations now have access to a range of quality expense management solutions which are well suited to driving down administration cost whilst meeting corporate compliance requirements. There are essentially three sources of 揺xpense management solutions?

1. ERP systems;
2. systems offered by card issuers; and
3. best-of-breed solutions.

Each will have their own merits and will suit organizations in different circumstances.

Enterprise Resource Planning (ERP) Systems

ERP sourced expense management has the attraction of being fully integrated within the financial suite of software, therefore offering a standard look and feel to all users of the ERP. With ERP sourced expense management functionality, the ERP supplies the core software, and the enterprise needs to customize and configure the system to reflect its own structures and rules regarding the management of staff expenses. If you're considering the option of using their ERP for expense management, you need to be conscious of a number of factors, including:

?the actual functionality available within their specific installed ERP system;
?the backlog of work on the ERP system accumulated for the IT department; and
?the deployment time and the cost of the project (which will usually be substantial).
License costs can be an issue if an enterprise if your company has not paid a license fee that will cover all card account holders and cash claimants.

Card Issuer Systems

Some card issuers promote 揺xpense management?solutions which can range from a computer generated report through to an online system with some embedded workflow concepts. The attraction of card issuer expense management solutions is that they are offered as part of a card deal, sometimes (apparently) for free. If you're considering a card issuer expense management solution, you need to know:

?will you be 'locked in' to the card issuer?; and
?will you be able to configure the expense management solution to adequately reflect internal requirements?

Best-of-Breed Solutions

Best-of-breed expense management solutions from specialist providers can be relatively seamlessly interfaced to an organization's internal systems such as HR and ERP, but will not present a common look and feel to the ERP system. You would usually choose a best-of-breed expense management solution if you want:

1. your company to be independent of a particular card issuer;
2. to achieve a fast implementation; and/or
3. to configure the solution to its own unique rules and policies of expense administration.

Best-of-breed expense management solutions are typically deployed as either an ASP (Application Service Provider) or self hosted solution. Although exceptions are common, small to medium enterprises tend to appreciate the lower up-front cost of an ASP expense management solution, and larger enterprises are attracted to the control available through a self-hosted expense management solution. ASP expense management solutions are typically paid for on a per statement per month basis, and self-hosted expense management solutions have a range of options available from up-front license fees to monthly license rentals.

Overcoming the Cultural Resistance to Expense Management Solutions

Some Finance Directors still have an aversion to corporate credit cards. It's not uncommon to hear a finance director say 搃f I give everyone a card, they'll spend us broke!?

However, the benefits of an Expense Management Solution are apparent as soon as the Finance Director considers the difficulties of controlling the expenditure behavior of thousands of employees using a manual system of reimbursements which is largely based around a set of uncoordinated spreadsheets. Basic activities such as enforcing travel policies, calculating tax implications, reconciling, posting to a chart of accounts at a detailed level and auditing, are so difficult as to be more honored in the breach than the observance...

Viewed from a different perspective, a company with revenues of $700m $50m in EBITDA, and $20m in annual employee business expenses, can make a dramatic impact on its bottom line using an expense management solution without increasing revenue. If automation reduces these expenses by only five per cent in the first year, the savings alone have the same impact on the bottom line as $14m in new revenue. It isn抰 surprising that the return on investment of an expense management project is often achieved within its first 12 months of operation.

Expense Management Solutions also play a vital role in Fraud Control. 揊raud?in this context takes many guises, not all of which are the sort that land perpetrators in court. Information taken from our own customer experience and from publications of the USA Association of Certified Fraud Examiners identify the top four categories of fraud:

1. Mischaracterized expenses
2. Overstated (exaggerated) payments
3. Fictitious expenses
4. Multiple reimbursements

Research in the USA has pointed to as much as 1% of company revenues being lost to employee expense mismanagement. Expense Management Systems will not, in their own right, eliminate this but they are a vital tool in creating an environment that drives down the level of mismanagement.

Conclusion

Over the past 18 months, our company has observed a change in motivation for expense management projects. Whereas formerly expense management solutions were an exercise solely in the reduction of administration costs, now governance is equally a driver to implement technology based controls around high volume expenditure. The Sarbannes Oxley (SOX) act in the USA has captured the attention of any enterprise active in the USA. However, inside or outside the USA, the senior executives must warrant that their company has implemented adequate financial controls that prevent fraud and give a true and correct record of the enterprise抯 financial activities. As a result, the Corporate Travel Manager who pitches a proposal on expense management to the senior executive team currently finds a willing audience.

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How to Inform Employees When You Sell a Business

What is the best way to inform employees when you sell your business? Wait until the transaction is a done deal.

After many years of representing people who want to sell their businesses, experience has taught me that complete confidentiality about any thoughts of selling are in the best interests of every business owner. Consequently, the best time to make any announcements about selling will be on the afternoon of the day your transaction closes. That announcement should be well rehearsed and should include a personal introduction of the New Owners.

The meeting should be planned in advance so that 100% of all employees are in attendance. In that meeting, you can explain your personal reasons for selling and that, after a diligent search, you have found the ideal New Owners.

You also can explain that you will continue to be involved in the operation of the business for a period of time in working with the New Owners. Then, the New Owners should explain their background, the reasons for being interested in the business and their desire to do whatever is necessary in order to grow the business and create more opportunities for everyone involved. Last but not least, the New Owners should indicate they plan 搉o changes?and want to meet individually with each employee to get their ideas and suggestions about how to best grow the business.

Typically, any person buying your business will want to keep virtually all of your employees, as they represent a significant portion of the value of your business. Jobs will be lost only in those extremely rare instances when a New Owner intends to relocate a business a great distance, and then normally after a period of both notice and transition.

The fact of the matter is that virtually all employees fare better in the future because a high percentage of New Owners come in with additional capital and a desire to grow their new business. This growth typically spells opportunity for employees who want to grow their careers and who welcome working with a New Owner.

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Employee Retention: What Employee Turnover Really Costs Your Company

It抯 one of the largest costs in all different types of organizations, yet it抯 also one of the most unknown costs. It抯 employee turnover.

Companies routinely record and report costs such as wages and benefits, Workman抯 Compensation Insurance, utilities, materials, and space, yet most companies have no and report the cost of employee turnover. It can be much higher than you think.

How Much is it Costing You?

Several well-regarded studies have recently estimated the cost of losing an employee:

?SHRM, the Society for Human Resource Management, estimated that it costs $3,500.00 to replace one $8.00 per hour employee when all costs -- recruiting, interviewing, hiring, training, reduced productivity, et cetera, were considered. SHRM抯 estimate was the lowest of 17 nationally respected companies who calculate this cost!

?Other sources provide these estimates: It costs you 30-50% of the annual salary of entry-level employees, 150% of middle level employees, and up to 400% for specialized, high level employees!

?Do a quick calculation: Think of a job in your organization where there has been some turnover, perhaps supervisors. Estimate their annual average pay and the number of supervisors you lose annually. For example, if their average annual pay is $40,000, multiply this by .125% (or 125% of their annual pay, a reasonable cost estimate for supervisors). This means it costs $50,000 to replace just one supervisor. If this company loses ten supervisors a year, then 10 times $50,000 equals $500,000 in replacement costs for just supervisors. This is the bottom line cost. The top line cost? If the company抯 profit margin is 10%, then it costs $5,000,000 in revenues to replace these ten supervisors.

Do These Numbers Seem Unbelievable?

Here抯 an actual calculation from a well-regarded organization in my community. The HR Manager of this human services organization (housing for disabled persons, sheltered workshops, etc.), estimated that 30 entry level people leave his organization on average every quarter.

This averages out to ten people per month. Let抯 be extra conservative and shave SHRM抯 estimate (see above) down to $3,000.00 to replace each employee.

This amounts to $30,000 per month, or $1,000.00 in employee turnover costs every day of the month! Annually, this totals $360,000.00.

Actual turnover costs are usually much higher than we think they are -- until we estimate them.

You may be thinking, 揝ome employee turnover is unavoidable, even desirable.?You抮e right. Some turnover is necessary, to replace marginal or poor employees with more productive ones and to bring in people with new ideas and expertise. However, high turnover costs are both avoidable and unnecessary.

This is where companies need to focus their efforts. The goal is to retain valued performers while replacing poor ones.

Most companies group both types of performers together when looking at turnover. By doing so, they抮e missing the cost and significance of replacing the good performers.

Why Don抰 More Companies See This as a Costly Problem?

There are a variety of reasons this is not seen as a problem, all of which cost companies in expertise and dollars. How many of these occur in your organization?

1. No process is in place to tabulate costs. One survey found that only 44% of its respondents had a process in place to estimate turnover costs; 43% of companies relied on intuition, and 13% had no process at all. (1)

2. Costs are not reported to top management. It抯 a business axiom that one of the best ways to get top management抯 attention is to show them what something costs. However, most top management never gets to see turnover cost estimates because most companies don抰 measure them -- or if they do, they don抰 report them to top management.

3. It抯 an inescapable cost of doing business. Except, it抯 not! While some turnover is unavoidable and desirable, most turnover, especially among your better and top performers, is largely avoidable. Thinking that turnover is just a normal cost of doing business is the same quality of thinking which says that accidents are just an inescapable part of being in the construction business.

4. It抯 an HR problem. While HR needs to be a key partner in reducing turnover cost, this is a strategic issue requiring top management抯 attention and actions, in addition to HR抯 efforts, to resolve it.

5. Costs are underestimated, and so they register less concern. If costs are underestimated because the organization doesn抰 agree on or know what to measure, the statistics generated either register less concern than they should, or are disputed and held in disregard.

What Costs Need to be Fully Estimated?

A comprehensive program measures the following costs:

Exit costs
Recruiting
Interviewing
Hiring
Orientation
Training
Compensation & benefits while training
Lost productivity
Customer dissatisfaction
Reduced or lost business
Administrative costs
Lost expertise
Temporary workers

There needs to be advance agreement among Human Resources, Finance, and Operations as to which cost measures will be considered valid. Then, it has to be measured and reported.

6. Waiting until there抯 a crisis. I was amazed when the executive director of one organization told me she knew that one of her capable managers was unhappy, but decided it wasn抰 necessary to take action because she hadn抰 received a letter of resignation yet.

Prevention is what works best. Begin to measure your turnover costs and, very importantly, look at who is leaving so you抣l know if you抮e retaining your best people.

The time to do this is now. Waiting until there抯 a crisis to take action limits your options and success rate. It also often triggers the common response of offering more money to get someone to stay, instead of fixing the original problem.
Why Do So Many Retention Efforts Fail?

These are among the most common reasons company retention efforts fail, even when they抮e implemented by capable people.

1. No assessment, so ineffective solutions are chosen. In their hurry to correct a costly problem, companies often forgo conducting a relatively brief and cost-efficient assessment in order to correct the situation faster. However, implementing a solution without diagnosing who is leaving, and why they抮e leaving often results in solutions that are incapable of solving the root causes behind turnover.

Diagnosing the reasons behind turnover always pays for itself. Don抰 start without an assessment.

2. Implementing too many solutions instead of the most effective solutions. Managers often brainstorm a number of plausible solutions, then implement many of them -- especially those favored by top management. However, what is most needed is to select and implement a limited number of solutions which will be most effective at solving the problem. Implementing too many solutions, even good ones, will diffuse your resources and weaken your efforts and success.

3. No way of measuring success to know what works. How do you know which retention solutions you抳e implemented are working effectively and which aren抰, where you need to make refinements, and what strategies you need to drop if you don抰 have a way of measuring your results?

How Do We Do a Better Job of Retaining Employees -- Especially Our Most Valuable Ones?

First, rank your employees in three categories: best performers, middle performers, and lowest performers. Your objective is to retain your top performers; develop and retain your middle performers, turning them into near-top or top performers if possible; and potentially replace your lowest performers.

Second, agree internally on the measures you抣l use to calculate turnover costs. Be certain you抮e taking all costs into consideration. Most organizations greatly underestimate them.

Third, report turnover costs to top management on a monthly, quarterly, and annual basis.

When turnover costs are unacceptably high, or higher than your industry抯 average, do an assessment. Find out who is leaving and why they抮e leaving. Exit interviews can help you find out why.

You need to know if it is your top, middle, or lowest performers who are leaving so you can gauge the expertise level leaving your organization. You抮e obviously going to employ (and pay for) different strategies if your top performers are voluntarily leaving, compared to middle or lowest level performers.

Develop solutions capable of solving the problems you uncover, and only implement a limited number of them.

Measure the success of your retention efforts, and refine them.

Two Very Key Strategies to Save a Large Amount of Time and Money.

Very key strategy # 1: Don抰 wait until turnover costs become unacceptably high before you implement an ongoing retention program. Put a retention program in place before you have crisis situation. You not only must find out why employees leave your organization, you must also find out why others stay.

Very key strategy # 2: Survey your top performers now in order to find out what keeps them there, why they might leave, what type of competitive offers they may find attractive, and what they need to be happier and more productive in their jobs. You抣l do a better job of keeping them (along with their expertise and value). You抣l also find out highly beneficial information about improvements your organization needs.

This means driving improvements in your organization by what your best people tell you, instead of focusing on taking care of the ever-present complainers in every organization.

Just How Valuable are Retention Efforts? One source estimated that a 10% reduction in employee turnover was worth more money than a 10% increase in productivity, or a 10% increase in sales!

Retain and gain.

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How to Make Friends and Avoid Enemies

Over the past few years an epidemic of rudeness has swept America. Here's how to stop the disease.

1) Acknowledge people. Answer the phone. Return phone calls. Listen carefully when people talk to you. Be an active participant in conversations. Never use your cell phone when with others, especially in restaurants or other public places. Remember: acknowledgment satisfies a basic human need.

2) Show respect. Use people抯 names when talking to them. Never invent nicknames or make fun of people抯 names. Be on time. Treat people as if they were smarter than you. Let others speak first. Remember: respect is powerful because it gives people dignity.

3) Compliment. Seek the good in everything. Avoid gossip and people who gossip. Remind people about successes they had, even if decades ago. Focus on what works and what went well. Remember: warmth, attracts people.

4) Be positive. Master optimism. Accept change and new ideas. Always focus on success. Expect the best to happen. Think in terms of the future and how you can make it better. Use positive (or at least neutral) words. Remember: leaders sell hope.

5) Be mature. Manage your emotions. Speak softly. Seek solutions. Let other people do well. Let people tell you things that you know. Let other people win. Share information. Remember: mature behavior creates trust.

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How To Make Mistakes

Promoting risk taking and eliminating fear of failure.

It would be a mistake to try to avoid all mistakes. Indeed, it would be a colossal blunder to attempt doing things right the first time, every time. In todays light speed economy, ("new" economy and "old" economy) if you don't fall on your face both regularly and painfully, you are likely to end up dead instead. The only people not making mistakes are ones playing their game without risk and without novelty - and I might add - without progress. If your company cannot accommodate, even reward, failure - in the long run, you cannot succeed.

Why? Doing things wrong, is the number one - perhaps the only - source of innovation. David Kelly, CEO of design firm IDEO, says, "...enlightened trial and error beats the planning of flawless intellects...The reason is simple: the best solutions to most problems are rarely the most obvious." James Joyce said it poetically, "Mistakes are the portals of discovery." Think about it. What did you ever learn by doing something right the first time?

IBM's rumored motto about mistakes is legendary: Fail Faster. Since the road to success is paved with failures, the faster you move through them, the faster you might find a way which works. Don't prolong the agony, get it over with quickly, learn the most you can, and move on. IDEO's Kelly says it succinctly, "we fail faster to succeed sooner."

World leaders and scientists have wonderful legacy of being wrong in a big way. Edison's tolerance for "mistakes" is renowned. The European "discovery" of America was a mistake. Even the invention of Teflon was a mistake.

Great companies also have a long and gallant history of failing. AMC's Gremlin was a big flop, but paved the way for ever-popular hatchbacks. What about New York City's World Trade Center, one of the first "cities in a building," remained half-empty for almost a whole decade. There are many famous failed computers, including Apple's Lisa and Newton or the Palm Pilot's predecessor, Zoomer - evidence that failures breed innovations rather than stifling them. Not all business failures are so glorious. 65 out 100 business startups vanish without a trace within five years and 90% are gone within ten years. But we need these failures - without them there would no companies to survive.

If you are in the surgery business or fly airplanes for a living, you may not want to make any mistakes. But for the rest of us - especially if you are in a technology business - doing things wrong is prerequisite to doing things right. As the philosopher Ludwig Wittgenstein said, "If people did not sometimes do silly things, nothing intelligent would ever get done."

Internet Time doesn't simply mean working 18-hour days. It means trying lots of ideas, making mistakes, and killing off bad results quickly. Many "old economy" managers still want to take their time and make sure everything is thought out - all the I's dotted, all the Ts crossed. Don't do it! You no longer have that luxury - if you ever did. Don't slow down your development cycle, speed it up.

In the spirit of failing quickly, here are a few ideas and tips for you to try out. Some will work for you. Others will not. Try and fail.

Don't penalize mistakes, encourage them. How about rewarding them? Create a bonus for the most brilliant (or most flagrant) mistake of the month. Put risk-taking mistake-makers' faces on your website or in your newsletter. Many companies say they encourage mistakes, but really intimidate and punish the mistake-makers. As soon as you begin to do that you foster a better-safe-than-sorry attitude. Instead, put your money where your mouth is.

What about having a regular meeting dissecting the mistakes-of-the-month, trying to learn their lessons. Train people to savor their mistakes, and understand the strange paths which led them astray.

Use rapid prototyping. This technical-sounding phrase simply means doing things quickly without trying to get them into final form, making mistakes and swiftly fixing them. Get something up and running - anything that resembles your desired solution. Then fix what isn't working. And fix, and fix, and fix. This may be the best way to do product development in Internet Time, also known as creative trial and error.

When things go wrong, do you sound a hunt for the guilty? Don't cast blame - commemorate mistake makers as heroes. One of the reasons mistakes go undetected - and progress slowed - is that people aren't willing to take "credit" for their errors. Rather than calling attention to things which are off course (and risking their careers), they prefer to bury them for as long as possible.

Use the concept of a "breakdown." When your car breaks down, do you blame the driver, or do you just fix the problem? When a project or a process is veering off course, treat it like a breakdown. Rather than spending time deciding who did what wrong, do this: restate where you are, where you want to go and figure out what will get you back on track. During the Iran Contra Scandal, President Reagan intoned, "Mistakes were made." There was no admission of guilt. No fixing of blame. Perhaps we can learn from this brilliant locution.

Create a company of learners with a formal debriefing policy. Without one, learning from mistakes is just one more accident. Debrief everything - good, bad or indifferent. Use the four-stage catechism of the learning organization: What worked? What didn't work? What was missing? What do we do next?

One way to really get things moving on a project is to declare a "state of emergency." Emergencies mobilize people. They bring out the whatever-it-takes attitude, especially when they know that "mistakes" will be tolerated, and that mistake-makers will be lionized.

Forget about total quality and zero defects. You can't afford it, especially in this day and age. Think of the 80/20 rule, or extend it to 90/10. There is a level of quality beyond which "mistakes" are a viable economic alternative. Unless the outcome of your product or service impacts life or death, the cost of perfection cannot be justified. Use the errors you generate as opportunities to improve your production process and practice great customer service.

Remember, the hallmark of progress is making mistakes.

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How To Make Changes In Your Healthcare Organization

For many of us change is a difficult process. In organizations like healthcare it seems to advance at a snail抯 pace sometimes. There is a need for change in healthcare, most agree, though we would be hard pressed to agree upon the changes needed. One incentive for change is pay-for-performance programs now beginning in several areas. I would like to describe a couple that affect primary care physicians and then give a few suggestions as to how to adopt changes to take advantage of these programs. Even if you are not in a primary care physician program, the methods suggested for change will be helpful, I believe.

In 2006 Medicare plans to institute a pay-for-performance program at the primary care physician level. Right now a model is being tested and seems to be doing quite well. In several states Blue Cross Blue Shield organizations are testing pay-for- performance programs. Here in West Michigan, Priority Health, a healthcare insurer, has promoted such a program for over five years. How does this work, you may ask? Priority Health, for example, funds the program for each of its patients a set amount. Doctors who meet a requirement of the program for a patient are rewarded with extra money for that patient. Hence, with many patients the income for the practice can be boosted considerably. The fact is that many are not rising to the opportunity. With planned cuts in Medicare reimbursements over the next few years, this source of income cannot be ignored! Healthcare programs need to change, no matter how difficult.

The impetus for change should rest with the leadership of an organization, although the change should not be the sole responsibility of the leaders. Representatives from all parts of the organization should be involved. Once the need for change in a process is agreed upon, either because of extra revenue from pay-for-performance programs or other agents or data that positively affect the bottom line, leaders should convene a task force to plan the change. With input from all, leaders should map the process as it currently exits and then should make a new map of how they would like it to be to incorporate the positive changes. The new procedure should be standardized for all to adopt.

How do you go about adopting these changes on a daily basis? This is probably the hardest part. Because humans learn in a variety of ways, it will take a variety of ways to implement the changes. The implementation of the changes should be based upon the learning styles of the individuals involved. Let me provide an example using the Medicare program. A patient who enters the Medicare program is entitled to a paid initial physical. A primary care physician should take advantage of this. Many don抰. If I were the manager of such an office, I would remind my staff who set up appointments to be aware of this fact. I would remind them at regular staff meetings. I would post visible reminders in the office. I might even have a message flashed on the computer screen once in a while. Then I would review the appointments of patients who have become Medicare qualified and see how many had their initial physical or were booked for it. I would adjust my methods to remind staff of the need for such examinations and continue to improve on this until the office achieves 100% compliance with the goal.

Booking the exam is not the only needed change. Doctors who perform the physical must accomplish examination details and actions laid out by Medicare. Hence, to be paid for the exam, each doctor must adhere to the exam details. I would help the doctors accomplish this in a variety of ways, depending on the doctor抯 learning style. For example, a checklist of the exam details might be included in the patient history folder when the exam is performed. That way the doctor will not miss any steps. As the leader of the change, I would check with billing to see that all the steps were performed and adapt new approaches or reinforce existing ones to see that the changes are accomplished 100% of the time.

Changes such as these should be a part of a continuous quality improvement program at every healthcare provider organization. Let me quickly review the most important steps. First leaders should identify the changes needed. Then, the leaders should convene a committee of all affected staff to develop how to accomplish the change. Once the staff agrees upon the approach, the leaders should develop ways to implement the change on a daily basis adopting methods that incorporate learning styles of affected individuals. Then, they should continually analyze the progress of the changes and make necessary adjustments until the goals are accomplished. They should then audit the changes occasionally to be sure that the organization doesn抰 fall back into old habits.

I believe that adopting such a change process will dramatically help at your site. You will see savings in time, increased patient or client health and satisfaction, as well as an improved bottom line!

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