GPI 015 – Good judgment comes from experience and experience comes from bad judgment!

The last thing that people want to talk about is their bad judgment, especially managers in business.  The problem is that a failure should be discussed to train those learning the business.  You want them to avoid these bad decisions in the future.  Transferring bad experiences in the form of stories or discussion points is exactly how managers should train their subordinates.  An older person tells a younger person that he was also young and stupid before he learned from common mistakes.

Have the managers write down five decisions that personally led them to make bad judgments.  This can be in their personal or professional life, inside or outside the company.  Accumulate all of the answers, categorize them for training purposes and be prepared to show employees why the company has rules and procedures in place.  These stories show humility and convey the idea that not all decisions are correct in business and when they are found to be wrong choices, they are corrected and learned from.  Mistakes are to be expected and all managers make them.  The important thing to teach your subordinates is that there is no reason why the same costly mistake should be made twice if good training is used.

Gather strong clear examples of your own company managers’ mistakes for training purposes.  Present them as representative and indicative of poor, misguided or bad judgments that demonstrate how small decisions can go very bad.  There are reasons for following company rules, procedures and proven training for all employees in order to avoid making mistakes.  Making the right decision is not always easy but considering the consequences of choosing the wrong choice makes it easier.  Learning from mistakes is important; learning from others’ is invaluable.

Examples of Bad Decisions:

1. Production control: A manager decided to ignore the assembly procedure designed by engineering when completing thousands of wired products.  When it was discovered the wiring was installed methodically wrong on each of the parts, he was forced to spend overtime in his department to have every one taken apart just to be reassembled a second wasteful time.  The original assembly procedure which was written for a specific reason was subsequently ignored and the company paid for this bad judgment.
2. Safety: A manager decided to take the safety guard off a machine to speed up the machine process which ended up injuring an employee.  The employee was treated and released but the injury could have been much worse.  This poor judgment could have ended tragically.  The manager truly wanted to get more production and did not desire to hurt his employee but his decision was wrong and conveying this to your listening audience in training has a very sobering effect.  Allow the manager who made this mistake to tell the story himself.
3. Credit approval: A credit manager was pressured to give a high credit limit to a new customer by all of the sales department representatives.  All the sales representatives repeatedly called him, told him to hurry up and grant this extended payment credit and allow a large shipment being held in shipping to be released to this new customer.  Instead of performing his normal due diligence and investigation which would have alerted him to a number of announced lawsuits currently forming in the court system against this potential customer, the hurried credit manager unaware of these problems allowed the big shipment to occur.  Sadly, the new customer did not pay the bill and once settled took a year to get paid for 25% of the original amount of $4.1M after legal fees.  This bad judgment stemmed from not doing thirty minutes of work and allowing the pressure of other departments to dictate poor system review.
4. Quality control procedures: A quality control technician ignored some of the procedures to verify release of a shipment of goods and the products were returned rejected by the customer’s receiving department.  This caused this customer not to send the next request for quote (RFQ, regretfully estimated later at $9.5M) to this specific company for bid.  The quality control technician did not know the results of his bad decision for over a year, when during an audit, it was disclosed by the interviewed company, just what happened.  The one thing he did know was that he skipped specific steps; he knew it was wrong, but he did it anyway.  Bad decisions sometimes do not immediately have bad impact on us, but inevitably they cost dearly.
5. Sales etiquette: A sales representative made a sales call to a new company suggested by his sales manager.  After calling on and giving a presentation to the client’s purchasing department, he started to leave.  As he was leaving out the lobby door, he turned to a young female at the desk and made an inappropriate remark.  As she nervously laughed, he thought it was taken without incident or any problem and left.  This receptionist happened to be the niece of the president of that company and she, being pampered and spoiled, reported the rude comment to her uncle immediately.  Indignant about the incident, the client’s president told purchasing not to buy anything from this firm and then proceeded to tell this embellished story every two or three months repeatedly, at his industry’s monthly conference ensuring that everyone in attendance knew how his niece was spoken to inappropriately by a representative of this company.  Soon the sales person who made this poorly chosen remark could not sell within the industry and was forced to accept a sales territory out of state.  He learned to no longer take receptionists for granted and quickly knew to keep his mouth shut.
6. Professional versus personal decision-making: A chemical company hired a highly regarded British biologist/chemist to run their new laboratory in the U.S.  He worked on and quickly built up a $50M business; took an apartment in New York City and was operating very successfully for several years, all under a ten-year work visa.  The chemist then made two critical mistakes.  He allowed his work visa to expire and also made the poor decision to bring a single young woman into his apartment in New York.  Upon learning this about her husband in the states, his wife in London notified U.S.  Immigration and had him deported at the airport before he boarded his next flight.  For this reason, he was subsequently banned from acquiring another visa for the U.S thus ruining the future of a lab dependent upon his expertise.  The company in the U.S. lost its most valuable asset and the $50M business withered quickly absent the genius behind it.  Two bad judgments had long lasting implications.
7. Do the paperwork without exception: The patent for Alexander Graham Bell’s telephone was sitting in a basket with other telephone patent applications in the patent office, unrecorded until his lawyer stopped before leaving that day.  Bell’s lawyer was smart enough to see the others sitting in the basket waiting for processing and promptly insisted to the clerk that she first give him a paid receipt before he left the office.  He knew this would require official recording and acknowledging his client’s paperwork ahead of all the others.  Supposedly because of this one smart request at the last moment, this provided proof of the application date and time and Bell’s telephone patent got recorded first in the local patent office.