Admitting your mistakes is crucial step in crisis management

Organizations that fail to manage their own mistakes effectively often pay the price in negative publicity and other unwanted consequences. This imprudent behavior is not limited to major corporations, either. A failure to confront and correct a mistake can affect any organization, especially those less experienced in the art of crisis management.

Everybody makes mistakes, at all levels of business. It’s how you handle the problem that often determines the impact it will have. Handle it badly and the results could be catastrophic, in terms of damage to reputation, credibility and lost business. Handled well, the response may actually burnish the reputation and business prospects of the organization.

The healthcare industry in particular has a long history of dealing with crises — literally, life and death situations. Any medical procedure, from a tonsillectomy to a heart transplant, carries risks. In the past, when things did go wrong (defined as an “adverse medical outcome”), the industry had a tendency to deploy a strategy of “deny and defend.” This meant trying to evade and deflect responsibility, and having lawyers handle any and all discussions related to liability. This approach often antagonized patients and their families and led to more lawsuits and higher liability payouts. This strategy also necessitated not apologizing for a bad outcome, because an apology might imply that an error had been committed, potentially exposing the organization to greater liability.

Over the past several years, however, many healthcare organizations have employed a different approach that, where implemented, has resulted in a reduction in the frequency and severity of lawsuits related to adverse medical outcomes.*

While the specific steps vary by organization, certain common themes characterize the best programs and their proactive approach to addressing mistakes. Taking a cue from the healthcare industry, the following  steps can provide some guidance in helping you create an internal program:

• Establish and maintain a baseline culture of risk management. Some organizational cultures turn a blind eye to problems, but every business needs to manage risk and embrace an environment where mistakes (which are impossible to completely eradicate) are acknowledged and evaluated to improve and strengthen the organization for the future.
• Engage in full disclosure. When bad things happen, provide sufficient information to explain what is currently known about what went wrong and what is being done to fix the problem. Promptly update that assessment as more information becomes available. By all means, be thoughtful and exercise care in what is being said and how. Hasty and ill-considered reactions to bad news often make a problem worse, not better.
• Accept responsibility and apologize when appropriate. Take responsibility and ownership of a problem. Passing the buck by blaming someone else can undermine confidence and impair credibility in you and/or your organization. An apology is not necessarily an admission of guilt. One can also apologize as a show of empathy for a customer experiencing a problem. Your organization may or may not be at fault, but demonstrating that you care can generate good will and facilitate an effective solution.   
• Defend actions when appropriate. As is the case with healthcare, not all outcomes turn out as hoped. If there was an adverse outcome and you were not at fault, consider explaining why and how you arrived at that conclusion.
• Seek a mutually fair and acceptable solution. If you or your organization made an error, explain what you can offer to do to indemnify the customer. Even more important, explain what you or your organization has done to prevent similar mistakes or errors in the future. In other words, what have you or the organization learned that will improve outcomes in the future and enhance the trust and confidence of your customers?  

As much as we may try to avoid them, mistakes happen. We can approach them in a positive manner and use these errors to improve ourselves and our professional relationships, or we can employ a range of tactics to avoid, obfuscate or otherwise pass the blame to someone else.

The right choice is obvious.

Want to learn more? Zurich Academy for Select Brokers® offers the course, “Accountability: An Ethical Imperative,” which explains how the strategy described in this article can be used to address and mitigate a broad range of liability exposures faced by individuals and organizations. Find more information in the Ethics and compliance section of the Zurich Academy course listings.

*”The Michigan Model: Medical Malpractice and Patient Safety at UMHS.” University of Michigan website. 2017.