ERROR MANAGEMENT: A PRE-EMPTIVE MOVE THAT CAN REAP LONG-TERM GAINS

From INSEAD Knowledge (http://knowledge.insead.edu)

Murphy's Law is to be believed, we should be doing a lot more to prevent mistakes from happening in the first place, especially when such errors can potentially turn into disasters. Take Chernobyl or the more recent NASA Columbia catastrophe, events that will long be remembered, but for the wrong reasons.

At an organizational level, errors are usually less dramatic that those at Chernobyl or NASA, but undesirable nonetheless.

Dave Hofmann, Associate Dean and Professor of Organizational Behavior at the University of North Carolina, thinks that error management is underrated, and says that such thinking has the effect of hurting the organization where it matters.

"I think from a leadership standpoint what you need to do is to create first a mindset that these things are important," says Hofmann.

Hofmann says that among the research conducted in computer science and information systems, where between 20 percent and 50 percent of spreadsheets within organizations contain errors, one notable study unearthed a $7 million fund transfer that happened by mistake.

With errors so commonplace within organizations, it's surprising that more isn't being done to eliminate them. Part of the reason for this could be that it's frowned upon within many organizations for employees to report errors, whether self-made or otherwise.

"Some other research, that we're doing in a slightly different context but we think has implications for error management, deals with who should be the source of that message and what should be the content of that message," Hofmann says.

"(What) we're doing actually suggests that leaders may not be the best source of that message, that it may be people who have had firsthand exposure to the ramifications of errors. So people that have made a mistake and suffered the consequences may make a much more compelling argument in terms of the importance of this issue for organizations than a leader who is distant, saying this is important you should pay attention to it," he explains.

After establishing who should communicate the error, Hofmann says leaders should then create systems and structures within organizations, so that if someone sees another person making an error, it's actually safe to approach him or her about it.

He also advocates formally designating a person as a "unit consultant" to deal with new employees who don't have a lot of experience around the company, so if they think they may have made a mistake and need help diagnosing what happened, help is at hand.

Hofmann believes that the virtues of setting up a formal system to manage errors will go a long way toward preserving the integrity of the company.

"If you understand that not engaging in error management and error recovery is an important part of your job, and if you understand through some of these real salient examples of what are the potential ramifications of this, in terms of human life or organizational reputation and harm to customers, then I think you're more likely with that mindset to say 'hey, this is important.'"

To ensure the system can work, Hofmann says correct behavior needs to be positively reinforced.

"You need a broader organizational culture that really balances fairness and justice and accountability, such that if someone reports an honest mistake that they're not hung out to dry for it," says Hofmann. "But rather they're rewarded for discussing it, so that they can help the organization recover from it before it creates a real negative problem in a much bigger sphere."