Good Employees Make Mistakes. Great Leaders Allow Them T

Good Employees Make Mistakes. Great Leaders Allow Them To.

 

 

As a business leader, I found that one of the scariest things to do was to give your people the freedom to make mistakes. While mistakes allow individuals to learn and grow, they can also be very costly to any company. Scared as I was, I knew that truly great leaders found ways to allow their people to take these risks, and I genuinely wanted to be a great leader. I wanted to help my employees to grow. So I set out to discover how to accomplish this without placing my company in jeopardy.

“Courage is not the absence of fear, but rather the judgment that something else is more important than fear.”   - Meg Cabot

I quickly discovered that the first step was to determine the areas of the business where a mistake could take place without causing too much damage. I took careful attention to make sure that any areas where we would damage our clients and the trust they had placed in us were off limits for significant risk without serious executive involvement and oversight. I identified other areas where I could feel more comfortable allowing people the freedom to experiment on new and better ways of doing things.

The second step was to communicate to the employees that we were setting an official company policy:  Making any mistake once was OK, so long as it was an honest mistake made while attempting to do what they felt was the right thing. Making any mistake once was OK, but repeating that same mistake a second time was NOT OK. The hard, fast rule was that if you made any mistake for the first time the entire team would have your back in fixing that mistake if anything went wrong. However, if you ever repeated the mistake a second time, then you were 100 percent on your own to face the consequences.  This rule applied for every first-time occurrence of each new mistake you made.

We all make mistakes. Every one of us. If we aren’t making mistakes, then we likely aren’t trying enough new things outside our comfort zone, and that itself is a mistake. That process is the best way to learn and grow as a person.  As John Wooden once said, “If you’re not making mistakes, then you’re not doing anything.” Mistakes are the pathway to great ideas and innovation. Mistakes are the stepping stones to moving outside the comfort zone to the growing zone where new discoveries are made and great lessons are learned. Mistakes are not failures, they are simply the process of eliminating ways that won’t work in order to come closer to the ways that will.

Great leaders allow their people the freedom to make mistakes. But good employees are those who when mistakes are made 1. Learn from them, 2. Own them, 3. Fix them, and 4. Put safeguards in place to ensure the same mistake will never be repeated again.

1.       Learn from them:  Good employees recognize that they have, in fact, made an honest mistake.  They do not get defensive about it, rather they are willing to look objectively at their mistake, recognize what they did wrong, and understand why their choice or actions were the wrong thing to do.

2.       Own them:  Good employees take accountability for their mistakes. They admit them readily.  They don’t make excuses for their mistake, rather they acknowledge that yes, they made a mistake and they express openly what lesson they have learned from that mistake. They go on to express steps 3 and 4 below.

3.       Fix them: Good employees do what it takes to rectify their wrongs. They are willing to do whatever they can to fix the problem and make it right. Certainly there are times when the damage is done and recompense cannot be made, but good employees do their very best to repair whatever damage has been done to the best of their ability. They always establish a timeline with follow up for when the problem will be fixed and make sure that progress is communicated throughout the process so everyone feels the urgency and care with which they are correcting the problem.

4.       Put safeguards in place to ensure the same mistake will never be repeated again: This is the most critical step in the learning process. When a mistake has clearly been made, the most important thing anyone can do is figure out what safety nets and roadblocks can be carefully established to ensure that this same mistake will never take place again. Document this step so the lessons learned and the safeguards setup can always go beyond you. Do everything in your power to help others learn from your mistake so they don’t have to experience them on their own to gain the lesson you’ve learned.

The steps to correcting mistakes apply to any area of life. Whether it’s business life or home life or personal life, the principles of apologizing remain the same. Good employees make a lot of mistakes, and truly great employees are those have mastered the art of apologizing for those mistakes:

Great People Practice The Six A’s of a Proper Apology:

• Admit - I made a mistake.
• Apologize - I am sorry for making the mistake.
• Acknowledge - I recognize where I went wrong that caused my mistake to occur.
• Attest - I plan to do the following to fix the mistake on this specific timeline.
• Assure - I will put the following protections in place to ensure that I do not make the same mistake again.
• Abstain – Never repeat that same mistake twice.

People who implement the Six A’s will find that the level of trust and respect others have for them will grow tenfold. People who implement the Six A’s will find that others will be quicker to forgive them and more likely to extend a second chance. It’s not the making of a mistake that is generally the problem; it’s what you do with it afterward that really counts.

 

Global Banks Are 'Divorcing' China

 

 

HSBC Group is expected in the next few months to sell its 8.0% stake in the Bank of Shanghai.  The financial services giant could receive as much as $800 million from its shares in the second-tier Chinese lender. 

Why do analysts think HSBC will unload its holding soon?  It looks like the Bank of Shanghai is set to raise $2 billion by selling newly issued stock, on the Shanghai and Hong Kong exchanges, with a value of up to 30% of its existing shares.  The listing could occur before June, so HSBC will have to act now if it does not want to be trapped by a lock-up period, typically imposed on existing shareholders for periods of up to a year.

Two years ago, nobody thought HSBC would ever dispose of major Chinese assets.  Now, there is talk it might get rid of all of them. 

Analysts sense a change in sentiment because HSBC is already dumping Chinese assets.  This year it completed the sale of its 15.6% interest in Ping An to Thai conglomerate Charoen Pokphand Group for $9.4 billion.  Previously, the shares in China’s second-largest life insurance company had been described as “strategic.”  Then, there are rumors that the institution, once known as the Hongkong and Shanghai Bank, will also sell its half interest in HSBC Life Insurance, which laid off 130 sales staff recently.

The investment community is even talking about a once-unthinkable event, the disposal of HSBC’s 18.7% holding in Bank of Communications .  John Bond, when he headed HSBC, wanted to increase the stake in Bocom, as China’s fifth-largest lender is known, and eventually control it.  Today, however, HSBC looks like it will never achieve management control.

The dominant view is that HSBC will be content to continue holding its Bocom stake because, as one unnamed Shanghai analyst told the South China Morning Post, a sale would mean “HSBC’s China story will be over.”   That analyst may think it is inconceivable that any major bank would ever exit China, but the country is no longer that important to the world’s financial community.

In fact, it looks as if HSBC will have to work hard to find another bank to take its Bank of Shanghai shares.  The fact that it could not find a financial institution to buy its Ping An stake is a sign that, in general, foreign bankers are “divorcing” China, as South China Morning Post columnist Doug Young recently put it.

The reason for the unhappiness is clear.  HSBC, for instance, sold Ping An because it was unable to get “strategic returns” from the insurance company.

HSBC is not the only institution to feel this way.  Analysts think Bank of America BAC +0.69% sold the bulk of its remaining China Construction Bankholding in 2011 and Goldman Sachs unloaded another tranche of shares in the Industrial and Commercial Bank of China this January because, like HSBC, they were frustrated that their large stakes weren’t helping them further their China businesses.  Chinese banks simply do not believe that they need enduring relations with foreign counterparts, which are now getting impatient.

This is a good time for foreign banks to pull the trigger.  For one thing, foreign institutions have been bailing out of China with big profits.  HSBC, for example, announced it would record an after-tax gain of $2.6 billion from its disposal of Ping An. 

Furthermore, prospects for the Chinese banking sector are not especially bright.  Profits at the big banks fell last year, and, as the International Business Times reports, profitability is on a long-term downward trend. 

Most important, there are growing concerns that Chinese banks are perched at the edge of a cliff.  They have been hiding substantial liabilities through various means, including moving unwanted assets off their books into “wealth management products”—high-yielding investments offered by technically unrelated pools—while nonetheless retaining risk of loss.  The China Banking Regulatory Commission, to its credit, issued regulations at the end of last month to force banks to rein in the shadowy products, but as a practical matter the rules only begin to address systemic problems. 

The infamous wealth management products, unfortunately, are not the only problem that could sink Chinese banks.  In fact, Standard & Poor’s, at the end of March, said it thinks bank exposure to local governments and shaky developers is a bigger issue. 

No one knows the full extent of China’s non-performing loan problem, but it is not a good sign that Beijing’s regulators are issuing warnings.  On Friday, the CBRC announced there had been an unspecified increase in bad loans in the first quarter of this year.  Presumably, the official non-performing loan ratio for Q1, when it is finally released, will exceed the 0.95% year-end 2012 figure.

Nonetheless, do not expect the new number to fully account for problem loans.  China’s faltering recovery is primarily the result of debt-fueled investment in unviable projects, such as “ghost cities,” and the banks will eventually be forced, one way or another, to bear inevitable losses.

In the absence of real non-performing loan numbers, we should not be surprised that foreign institutions have been selling down their positions in Chinese banks.  And the process will undoubtedly continue.  Doug Young, the columnist, implies a disappointed Citigroup could be the next big institution to unload once-coveted China holdings. 

So how bad is the situation?  HSBC is selling Chinese assets to raise capital to grow its business in .  .  . Europe.

 

 

Is Apple Looking For A Replacement For CEO Cook?

 

 

Is Apple AAPL +2.24%  (AAPL) secretly searching for a new chief executive to replace Tim Cook? Some Wall Street sources close to some Apple executives say such a move is afoot, although there’s yet no available evidence that the board of the once-mighty top tech-innovator is officially in such a game-changing mode. But if it isn’t yet pursuing such a goal, it should, according to some big stakeholders, who have trimmed their Apple holdings.

They assert privately that it’s time for Appleto oust Cook. Under his tenure Apple shares rose to an all-time peak last September, but they have since been cut nearly in half. (Ed. Note: an earlier version of this piece mistakenly said Apple has fallen by half since Cook first took over.)

At least one of them believes there’s a move by some at the company to search for someone with credible credentials and superb tech qualifications to take over and turn things around, lest Apple go the way of Hewlett-Packard HPQ +0.56% and JC Penney.

Their concern over what’s happening at Apple has heightened as there’s no sign that the bleeding will stop quickly. From a trading high of $702 a share reached in September 2012, the stock has spiraled into a freefall, plummeting to $390 a share by Apr. 19, 2013 — a new 52-week low.

The surprise is most analysts at major Wall Street firms remain generally positive towards Apple. Since the passing of the incomparable Steve Jobs, Apple’s shine has faded as its dynamic sales and earnings growth — and its stock’s mighty march upward — reversed gear. Apple is in a “quiet period” when it’s not allowed to make any public comment because it’s scheduled to report quarterly earnings on Tuesday.

The Street’s bullish stance is astonishing considering that some $290 billion of Apple’s market value has been wiped out in just six months. Of the 37 analysts from major securities firms who follow Apple, none has downgraded the stock to a sell, according to available data from MSN.com. But 25 of them still recommend the stock as a “strong buy” and six others rate it as “moderate buy.”  Another six Apple watchers rate the stock as a hold.

One of the chief reasons why these analysts continue to favor the stock is Apple’s huge cash pile, estimated at more than $137 billion, and what the company could do with it to win back the thickening crowd of disappointed and displeased investors. And strong demand for Apple’s innovative products has continued, led by the iPhone and iPad. And speculation persists that soon Apple will announce another new must-have product, which should help the stock recoup its sharp decline.

“We expect Apple’s growth to exceed that of many of its peers,” says Scott Kessler, analyst at S&P IQ, one of those who rates the stock as a strong buy. Considering Apple’s substantial cash position, “we see the stock as a compelling value,” he adds. And he believes sales of iPhones and iPads “will continue to grow at a healthy pace through 2015, despite macroeconomic and competitive threats.”

There is also rising expectation that Apple will use its robust cash stash to issue a special  dividend and repurchase shares. “We believe Apple’s balance sheet will be increasingly employed for dividends and stock repurchases, aiding shareholder value,” says Kessler. Apple’s current dividend yield is already a hefty 2.47%.

But the real issue confronting Apple is its lamentable slowed growth — and whether the slowdown will continue. Even Kessler concedes sales won’t be as robust from here on. He estimates that revenues in 2013 will rise about 14%, way down from last year’s 45% increase. Sales of iPhones and iPads will drive much of that gain. And he figures that sales of Mac computers will also decline, in part due to cannibalization from tablets, including the iPad.

So for 2014, he figures revenues will stay flat and just equal the estimated rise of 14% in 2013. As to profits, Kessler also expects earnings to be flattish in fiscal 2013, at $44.29 a share, compared with $44.15 in 2012.

So unless Apple CEO Cook announces something really dramatic in new products or astronomical earnings on Tuesday, the stock will surely decline even more. And so will Tim Cook’s standing with shareholders and investors — and Wall Street. That may finally signal his exit.

Several of Apple’s big stakeholders have already cut back their holdings as of their Dec. 30, 2012 filings. Among them: Fidelity Management & Research,State Street STT +0.56% Global Advisors, TIA-CREF, Invesco IVZ +1% Power Shares Capital Management, and Northern Trust NTRS -0.76% Investments.