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Etiquette Observed During Masters Good Lessons for Business

As the eyes of the sports world turn to the perfectly manicured green course at Augusta National as the annual Masters Golf Tournament begins, I thought about how some of the etiquette of golf can be applied to lessons in the corporate world.

As one of the only sports where there are no referees or umpires to enforce rules, golf relies on players observing the traditional rules. Attendees at the Masters must observe certain rules as well, including absolute silence during play. (Just try yelling out, “Way to go, Bubba!” after last year’s champion makes a challenging putt and find out just how seriously these rules are observed.)

Here are just a few of the rules of golf that you can apply in a business setting:

Masters_Logo_040509• Be prepared to hit your shot when it is your turn.

When you’re playing a round of golf, you’ve got to keep your group moving in consideration of those behind you. In the business world, when you are charged with responsibilities for a project or a big deal, you have to meet your commitments and deadlines to keep the deal on track.

I’ve worked with several companies where key employees just didn’t seem to understand that if their work wasn’t completed in time, the whole project could derail. One of the ways I deal with this, as I mention in my new book, “How Not to Hire a Guy Like Me,” is by using a whiteboard. With everyone involved in attendance, we outline the entire process and place goals at appropriate intervals. Not only do I get buy-in from the entire group this way, they also see that if they don’t meet their deadlines, it affects everyone else.

• Don’t spend too much time looking for a lost ball, especially if there is a group behind you.

When something goes wrong in a company, it is important to figure out what happened so the mistake isn’t repeated. But spending a lot of time looking for people to blame and generating massive reports after the fact can keep a company from moving forward.

Accept the loss, take action or put policies in place so it’s not repeated and move on.

• Keep carts away from greens and hazards.

A business leader needs to maintain focus on the path ahead and keep his company nimble enough to respond to any potential obstacles. Take a look at Kodak, once the standard for photography. Everyone had Kodak moments. Even though Kodak actually invented the first digital camera in 1975, the company failed to foresee that the rise of the popularity of digital photography would decimate its market. After 131 years being a pioneer in the industry, Kodak filed for bankruptcy last year.

• Rake sand bunkers after hitting to erase footprints. Replace divots.

Always rake sand bunkers after hitting your ball to erase your footprints and damage to the area where your ball was. If a business owner or CEO makes a mistake, I always urge him or her to correct the error and also to admit it. They may have ended up in the sand bunker of the business world but there are lessons to be learned while you’re there.

• If you hit a hole in one, buy everyone a drink.

Okay, so this one isn’t really a rule but it’s a nice tradition. If your company lands a big account, meets an aggressive deadline or completes a large and challenging project, celebrate together. It’s a way to recognize your employees’ efforts, build morale, and encourage them to work hard on the next opportunity.

When I was successful in helping a company I call Cheerleader Supply emerge from bankruptcy, I bought the judge and everyone in the courtroom a set of pom-poms. They are a reminder that even when things appear most bleak, it’s important to keep a positive attitude and keep on trying. There’s always a chance you’ll come back.

Just ask Tiger Woods.

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“Nice People” Commit Fraud

“Bernie would never do that. He’s my friend,” said one potential investor who lost everything.

“He seemed like a nice person and not concerned about answering my questions at all,” said the reporter.

These were a few comments made about Bernie Madoff in the movie “Chasing Madoff” that I saw recently. It’s a documentary about whistle blower Harry Markopolos, who spent 10 years trying to get action taken on what he had quickly recognized was a massive fraud when his company asked him to come up with a competitive product and he ran the numbers.

Those comments struck me because that is often the case when I’ve uncovered fraud at my clients’ companies. Management and co-workers say, “Why, he is the nicest person in the office.”

He was such a nice guy, some people commented about Bernie Madoff. He would never steal money.

He was such a nice guy, some people commented about Bernie Madoff. He would never steal money.

I’ve seen everyone from owners’ best friends to grandmothers to the kindly old lady in the church office commit fraud. It’s been my experience that most of these people have no prior offenses, which was backed up by a report generated by the Association of Certified Fraud Examiners (ACFE) a few years ago. Here were a few other key findings from that report.

• More than half of the offenders were between 31-45 and slightly more likely to be male. The older the offender is, the bigger the loss.

• More than 80 percent of offenders work in one of six departments: accounting, sales, operations, sales, executive/upper management, customer service or purchasing. No big surprise there — these are the people that have access to money, can write off on purchases or have expense accounts.

• Only seven percent had been previously convicted of a fraud offense. I believe that low percentage is partly because most fraud offenders are let go from previous companies and never prosecuted. This is just one of the reasons I always advise my clients to prosecute those who commit fraud.

In the ACFE’s 2012 Report to The Nations on Occupational Fraud and Abuse, it was reported that the median loss suffered from fraud cases was $140,000. But more than 20 percent of the cases involved losses of more than $1 million.

Small business owners especially need to be concerned as they are more likely to be hit, primarily because they have fewer internal controls.

Want to take a guess how long the fraud goes on before it was detected? A median of 18 months.

Most people don’t go to work for a company with the idea of stealing from it. Most of them see an opportunity and then seize it. And that person is often the nicest person in the office.

I write a lot about fraud and how to prevent it in this blog and also in my new book, “How Not to Hire a Guy Like Me.” I tell the story of sweet Aunt Tess, a payroll clerk that everyone at the office loved. And she was so dedicated she had never missed a payroll in 25 years, even dragging herself to the office hours after an appendectomy. Bless her heart!

Well, old Aunt Tess was there, fresh surgical bandages and all, because she had a whole army of fictitious employees that allowed her to steal up to $100,000 a years.

Fraud does, and can happen to anyone. If you don’t have fraud controls in place in your office, make it a number one priority to do so. Maybe the nicest person in the office can stay that way.

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The Downsides of Bankruptcy

The parent company of Reader’s Digest magazine recently filed for Chapter 11 bankruptcy the second time in less than four years. The U.S. arm of Atari, the video game maker that brought the world the classic game “Pong,” also recently filed for Chapter 11.

Even though it won an Academy Award this year for best visual effects for “Life of Pi,” the visual effects company Rhythm & Hues filed for bankruptcy.

Despite these high profile filings, the American Bankruptcy Institute recently reported that commercial Chapter 11 bankruptcies actually fell a whopping 36 percent from January 2012 to January 2013, from 749 to 479.

Although the decrease in bankruptcy filings may be partly a result of the slowly improving economy, it’s also due to the fact that companies are increasingly looking to alternatives to filing bankruptcy. It’s no longer assumed to be the leading default option for companies in financial distress.

In my work as the Turnaround Authority, I generally discourage my clients from declaring bankruptcy. While bankruptcy does offer several tools that may not otherwise be available, such as the ability to sell assets free and clear of liens and claims, and the ability to accept and reject contracts, I want companies to carefully consider the downsides to bankruptcy before making that move. Here are just a few I want them to consider.

It results in loss of control. While the client may still be running the daily operations, he is no longer in control of the major decisions. The judge approves all major decisions.

It’s expensive. High attorney fees can actually result in businesses being forced to liquidate to pay all the fees. Fees in excess of $1 million dollars are not uncommon. Companies have paid in excess of $1,000 an hour during a bankruptcy reorganization.

In addition to paying for its own lawyers and financial advisors, the company has to pay those of the creditors’ committee and the secured lenders.

The law firm Weil, Gotshal & Manges was lead counsel for the Lehman Brothers bankruptcy, raking in $389 million in fees and expenses in 3 ½ years. But that wasn’t all of it. The total paid out to all of the firms on Lehman’s tab? More than $1.4 billion.

An interim CEO or Chief Restructuring Officer, like me, may be brought in to handle the process, which adds another layer of costs.

It harms the company’s reputation and may discourage future investments. Just a rumor about the impending filing of Chapter 11 bankruptcy by American Airlines parent company AMR caused the shares of stock to plummet by a third and 67 million frequent flyer members fretted over what would happen to their miles.

Owners and stockholders may lose a great deal of money. The bankruptcy court determines the order in which creditors are paid back, with secured creditors first in line. Stockholders are always at the back of the line and generally need to invest additional funds into the restructured entity in order to maintain equity in the new company.

The actions of the firm’s leadership are closely examined and may lead to criminal charges. After Enron filed for bankruptcy, dozens of its executives were subsequently charged with criminal acts that included insider trading, money laundering and fraud.

I tell this story in my new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOS’ Mistakes.” I was brought in as an interim CEO for a company that had filed for Chapter 11. On its books was $50 million of inventory at a plant in Ireland. I decided to go take a look. Turns out the plant was actually a vacant lot, but had been claimed as inventory to inflate the value of the company so it could qualify for a larger loan than it would have.

Few companies emerge intact. Less than 10 percent of companies filing for bankruptcy protection emerge as they were when they filed. Generally, assets, divisions, or the entire company are sold to provide the funds to work out a Plan of Reorganization.

Bankruptcy is a viable and helpful alternative for some companies. I’ve worked with many over the years and was successful in bringing them out of bankruptcy.  But it’s difficult and takes time and money. It’s not the best tool for every company and alternatives should be carefully considered.

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Focus on Retaining Customers for Continued Growth

It seems to be human nature to always be chasing after the newest thing. As just one example, think about how many people eagerly anticipate the latest product from Apple. When the new iPhone 5 was introduced last fall, people in New York City set up camp eight days in advance to snag the latest model.

It’s no different in the business world when it comes to chasing the newest big customer. Maybe it’s the thrill of the hunt and the excitement when you finally sign on the dotted line for a huge purchase order, or hear those sweet words, “We’d like to hire you.”

Of course, you’ve got to constantly be working to acquire new customers. Even when your business is humming along at full capacity, you’ve got to keep filling the pipeline to keep your business growing and replace any lost business.

The problem is when all the attention is focused on landing that new customer, without paying adequate attention to current customers. To keep your company growing and thriving, you’ve got to maintain focus on retaining the customers you have.

Here are just a few reasons it’s important to do so:

• Statistics show that 80 percent of your company’s future revenue will come from just 20 percent of your existing customers.

• A 5 percent increase in customer retention can increase a company’s profitability by 75 percent, according to a study done by Bain and Company.

• Estimates show that it costs five times more to attract a new customer than maintain an existing one.

• U.S. corporations lose 50 percent of their customers every five years with an average defection rate of 10 to 30 percent each year, according to business researcher Frederick Reichbeld.

That’s a lot of money walking out the door that you may be able to save. If you’re not paying enough attention to current customers, you need to start now. So what should you do?

The good news is that it doesn’t have to take a lot to keep current customers happy. It can be as easy as regular phone calls, just to check in and ask how everything is going and if there are any concerns you need to address. Ask if their business is about to undergo any major changes where your company may be of help.

Make sure your current customers get notice of upcoming sales promotions prior to making them public. Offer some special deals now and then, for current customers only. Keep their pricing competitive with the marketplace.

If you’re introducing a new product, invite your current customers to come experience it. If they are currently using your products or services, they are your best market for any new products and can provide valuable feedback. That’s what I call a win-win.

You can also engage with your customers on social media. If a customer’s business is having a promotion, post it on your Facebook page or retweet it to your business’ followers as a way to offer them additional support.

It’s all about regular communication and making your current customers feel valued. Let them know you appreciate their business.

There’s an old Texas saying, popular with the late famed University of Texas football coach Darrell Royal: “Dance with the one that brung you.” Support those who are supporting you: your current customers.

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How to Lay Off Employees the Right Way

In my last blog post I shared some lay-off horror stories. One company conducted a fire drill and then told its employees over a loudspeaker that half the company was being laid off. They should each try to get back in the building and if their key cards didn’t work, that meant they were no longer employed. That must be the worst fire drill on record that didn’t actually involve a fire.

Laying off people in the right way is crucial to maintaining the morale of the remaining employees and reinforcing the reputation of the company as a good place to work. Business reasons aside, it is the right thing to do for someone who has been devoting their working hours to your company.

What some executives fail to see is that layoffs are not just about the person or people who are being let go. They are about your company’s reputation and the morale of the people being left behind.

url-1In 2008 Zappos.com had to lay off eight percent of its employees due to the downturn in the economy. Rather than keep it quiet, CEO Tony Hseih turned to social media to explain why the layoff was necessary. He tweeted and blogged about it, explaining how the company was compensating each employee with health insurance coverage and a severance package.

On November 6 he sent an email to all Zappos.com employees that explained exactly what steps the company was taking and why, how hard the decision was and that it was offering employees more than two weeks of severance pay. That email included these paragraphs:

“I know that many tears were shed today, both by laid-off and non-laid-off employees alike. Given our family culture, our layoffs are much tougher emotionally than they would be at many other companies.

I’ve been asked by some employees whether it’s okay to twitter about what’s going on. Our Twitter policy remains the same as it’s always been:  just be real, and use your best judgment.”

He was transparent, communicated honestly with his employees, demonstrated that he trusted them, and actually generated goodwill among his employees and his customers in the midst of the layoffs. That is an example of the right way to handle a company-wide layoff.

Here are four steps to laying off a person the right way. Of course, with any layoffs you must be sure to follow guidelines set by your HR department. You should also have input from the legal department and the HR department for each layoff.

• Handle the layoff in person.

Whoever is handling the layoff, usually that person’s supervisor, should meet with the person, along with a representative from HR, in private and deliver the bad news upfront. Don’t prolong the inevitable with lengthy discussions about the economy, the current market or recent losses the company has suffered. Deliver the news quickly. If your company has been upfront and communicating as it should, the employee should have known that things were not going well.

If a HR representative is not available, make sure there is a second person in the room to act as a witness.

• Treat the person with respect.

Whoever is handling the layoff should be aware of the guidelines set by HR and should deliver the news in such a way for the person maintains his dignity. Stay focused and offer a clear explanation for the layoff within guidelines set by your HR department.

• Listen with boundaries

It’s uncomfortable to lay someone off and deal with the emotional response. While you may want to usher them out of your office as soon as possible, it will help the employee leave on a better note and send the employees who are staying a positive message about how you treat people if you take the time to listen. You may not like or agree with statements the employee makes, but it’s important for the employee to felt like he was heard and you paid attention.

• Offer encouragement

If possible, offer some assistance with references or any assistance or outplacement services your company has. Share information about support groups or information centers that may help the employee with the next steps in his career.

Laying off someone is never a pleasant task. But sometimes it is the only way to save the company and employment of hundreds, if not thousands of other people. And handling it in the right way will make everyone feel better about the process.

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How Not to Lay Off Staff

The chairman of a network of local websites in the Northeast sent the following email to his staff on a recent Friday afternoon. It was a follow-up to an email they received earlier that day informing them that the CEO was resigning.

“Monday morning we will share with you the news about where we’re going and how we’re going to get there. The news is good—but you’ll need to sit tight while we finalize our plans. Check your email about our company-wide phone conference early Monday morning.  …I am pumped about the prospect of working with you to build a great company.”

urlIt’s nice to get a positive, hopeful email from your chairman in our still-struggling economic times, isn’t it? But what happened on Monday could hardly be classified as good news.

That morning employees at Daily Voice were told that it was shutting down 11 bureaus in Massachusetts and laying off everyone in those offices with no severance pay. The Chairman had flat out lied to the employees.

That’s just one example of how not to handle a layoff. You’ve probably heard plenty stories of bad layoffs. There was the woman who received a FedEx package at home with her severance in it. Problem was no one told her she was being laid off. Or the woman who was lying in a hospital bed when her boss thoughtfully came to visit, bringing her a bouquet of flowers. And a severance check.

Another woman named Sylvia found a document, available for public viewing on the company’s shared hard drive, called SylviaFired.doc. She read it and spent her last few hours at the company correcting its many spelling and grammar errors. If you’re being let go like that, at least all the words should be spelled correctly.

At one small ad agency where a husband and wife both worked, the husband got laid off. Then a few hours later his wife was laid off as well because the creative director thought she would be uncomfortable working in the office that laid off her husband. More uncomfortable than losing both incomes in one day?

One of the worst stories I’ve heard is about a company that evacuated hundreds of employees for a fire drill. They were all standing outside when a person on a loudspeaker said, “Due to the ongoing recession and bad business climate, the company is laying off 50 percent of its staff. So when the announcement finishes I ask all of you to move back to the building. If your employee card does not give you access to the building, it means you have been laid off and will not be allowed inside the building. All of your belongings will be sent to you.”

That sounds like the premise of a horrible reality TV show, but in this case half the people get kicked off the island.

In my position as The Turnaround Authority I’ve had to lay off hundreds of people. It’s never easy and I do it with full recognition of how losing their jobs will affect the employees’ lives and those of their families. But sometimes it is the only way to save the company and employment of hundreds, if not thousands of other people and their families.

While unpleasant, there is a right way and a wrong way to lay off someone.

Stay tuned for my next blog post for the right way to lay off an employee. And there are no fire drills or bouquets involved.

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Learning the Family Business – In a Classroom

While many college students due to graduate in 2013 are stressing over finding a job, a lot of students already know where they will be spending their days after turning the tassel on their mortarboard. The family business.

Family businesses employ 62 percent of the U.S. workforce. Two out of five Fortune 500 firms are family businesses so every year thousands of recent grads will join family members in the workplace.

A lot of colleges, particularly those with entrepreneurship programs, are responding to the large numbers of young people who are taking that path by teaching courses on managing family-owned businesses.

urlAccording to a recent article, Northeastern University launched a class in 2011 and Rice University in Houston and University of Denver have recently launched courses.

New York University added an undergrad course on family business this semester and Savannah State University will add one next year. Some schools, including Saint Joseph’s University in Philadelphia, have family business majors.

It’s probably a lot easier to get the parents to foot the bill for tuition when it’s an investment in the future of the business as well as in their kid.

Students who are juggling multiple interviews, nervously waiting for calls for a second interview or contemplating the horror of moving back into their 1990’s-era childhood bedroom under the draconian rules of mom and dad may be feeling a bit envious of their classmates who never had to answer a question like, “Where do you see yourself in five years?”

Those kids won’t be sitting across the large wooden desk of some executive asking, “Tell me about yourself.” Their future employer changed his or her diapers or watched them blow out candles on multiple birthday cakes.

While these young folks slotted to join the family business may not have to worry about finding a job, they have a lot to deal with when it comes to actually doing the job and maintaining family relationships.

You can quit a company and never hear from them again, with the only reminder the W-2 you’ll receive the following January. But you can’t quit your family.

I write a lot about family business in my new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.” While it’s true that family businesses make up a majority of those in the U.S. and can be extremely profitable — take Walmart for one — they involve additional complications. Why do you think so many companies have anti-nepotism policies?

In my work as The Turnaround Authority, I have often been called in to run or consult with family businesses and have seen all the difficult situations that can arise when you mix family and business.

There can be issues of family members in the wrong jobs making poor decisions, questions of favoritism and bad morale among the staff for non-family members. And if you think it’s hard to fire any employee, think how much harder it is to fire Uncle Ned, especially when he and Aunt Irene host Thanksgiving every year.

No matter how many classes you take, you can’t learn everything you need to know to run a family business. Or any type of business for that matter. But taking courses in topics such as family succession and governance can be beneficial to students.

One young man mentioned in the article is Tony Holzbach, who is taking classes at Texas Christian University and will one day take over a wholesale and retail garden center in Forth Worth that his parents started 30 years ago.

He wasn’t too sure about what he could learn by taking a class and thought his dad knew everything about the industry. But after just a few weeks, he said, “I have discovered that there is much more to family businesses than I had realized.”

Just getting someone to admit that there’s a lot they don’t know is a great first step.

 

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Low-Tech Fraud Thrives in High-Tech Era

Some things never go out of style. Take all kinds of fraud, for instance. Even in the era of increasing high-tech fraud committed on the Internet, good old-fashioned low-tech fraud is here to stay.

Just this week I read about three cases in the news that involved fraud of the low-tech variety. People stole millions of dollars with nary a click of a mouse.

The ironically named Angel Food Ministries was in the news again because the founders of the now-defunct faith-based non-profit that provided low cost food through a network of churches and civic organizations pleaded guilty to federal charges.

The indictment, which was a whooping 71 pages, included allegations that pastors Joe and Linda Wingo and their son Andy took kickbacks from vendors, used ministry credit cards for personal purchases and trips to Vegas and New York, and used ministry bank accounts for their own benefit.

Staten Island deli king Saquib Khan took the concept of check kiting to a whole new level

Staten Island deli king Saquib Khan took the concept of check kiting to a whole new level

It’s hard to understand why the pastors needed to treat the ministry’s accounts as their own when they were paying themselves $2.5 million in executive and family compensation. I guess angels have a lot of expenses and those wings won’t fly them all the way to Vegas.

Another case of low-tech fraud in the news involves postal workers with sticky fingers. Remember how your mom told you never to send cash through the mail? Well, these folks were stealing more than $10 bills tucked inside little Susie’s birthday card.

Gerald Eason and Deborah Fambro-Echols stole more than 1,800 tax refund checks, Social Security and veterans’ benefit checks in Georgia for the past four years while working at the Atlanta Processing and Distribution Center. They recruited some equally unethical people at banks and businesses to cash their stolen checks.

They’ve been sentenced to jail and fined, as have some of their equally shifty cohorts who cashed the checks.

My favorite story involves Staten Island deli king Saquib Khan, who committed fraud to the tune of $82 million. That’s no bologna, no matter how you slice it.

Trained as a doctor in his native Pakistan, Khan moved to the U.S. in the 1980s and wound up working with his sister and brother-in-law in the deli business. He then founded Richmond Wholesale Company and owns three delis of his own. Sales last year for the cigarette and grocery business were $125 million.

After Hurricane Sandy caused his business to encounter financial troubles, Khan put that creative entrepreneur mind to work and devised a scheme that involved writing hundreds of worthless checks to himself, then depositing them in accounts in several banks under his name or in one of his businesses names, and withdrawing money.

In just two weeks in November he wrote more than a dozen checks a day to himself, drawing from accounts at six banks. Several lawsuits are pending against him and he is trying to pay the money back, which may involve selling his business. Khan may have sliced his last salami.

No matter how technologically advanced our society becomes, low-tech fraud will always be with us and cost corporations billions of dollars a year.

That’s why I devoted an entire chapter to fraud in my new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs Mistakes,” with tips on how to prevent it and what to do if it occurs. No matter what business you are in, or how big it is, you are susceptible to fraud.

And remember, mom was right. Don’t send cash through the mail.

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Two Keys to a Successful Negotiation

“So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself.”

— “The Art of War” by Sun Tzu

“The Art of War” by Sun Tzu may be more than 2,000 years old, but that Chinese general knew a lot about the art of negotiation. I particularly like this quote as it contains one of my keys to a successful negotiation: educating myself as much as possible about my opponent.

I negotiate constantly. To be successful as a turnaround authority, I have to know how to negotiate with CEOs, bankers, employees, union workers, vendors, lawyers and emotional relatives.

When I’m involved in a tough negotiation I need to be prepared. Part of that preparation involves finding out as much as possible about the motivations of my opponent for that particular deal.

Let’s say I’m talking to a lender about settling an outstanding balance my client owes. Before I negotiate I’ll talk to my client to find out all the details on the outstanding balance and what he can afford to pay.

Then I try to assess what the needs of that lender are. Does he need to get this loan off his books quickly? Has he been trying to collect for a long time and he has a bad case of lender fatigue? Or maybe he’s new in his department and is trying to build a reputation as a tough negotiator.

I enter into negotiations with as much knowledge as I can and then as I began negotiations, try to determine more about what is driving the other person. Is it money, timing, company reputation?

While I consider myself an aggressive negotiator, I also negotiate in what I consider a positive and open way. I don’t go around behind the parties’ backs to try to undermine or manipulate the process by currying favor with the senior management or others involved in making decisions. I don’t make any implied promises on behalf of the companies I work for that I know they don’t plan to honor. As Otto Von Bismarck said, “When a man says that he approves something in principal, it means he hasn’t the slightest intention of putting it in practice.”

That is the second key to what I consider a successful negotiation: to come up with an acceptable deal for both parties. When possible, I try to follow the advice J. Paul Getty’s father gave him. “My father said, ‘You must never try to make all the money that’s in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals.’”

Sun Tzu covered that topic in “The Art of War” as well, in a more poetic fashion. “Build your opponent a golden bridge to retreat across.”

For more business advice, including a story of how creative negotiation involving a $3,000 mobile office saved a $15 million deal, please check out my new book, “How Not to Hire a Guy Like Me.”

 

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Admit Your Mistakes

“The CEO of Apple says a leader should admit when he’s wrong.”

“That won’t work for me because I’m never wrong. The best I can do is admit when other people are wrong.”

“That sort of misses the point.”

“Well, I humbly admit you’re wrong.”

— A Dilbert cartoon by Scott Adams

A friend was interviewing a woman for a high-level position in his company and asked a fairly typical question. “What was a mistake you made and how did you handle it?”

“Well, I’ve never made a mistake,” she said.

I would have ended the interview right there. With those six words, that woman revealed that she is not someone I want to hire. She let me know that she did not recognize her mistakes and that when things do go wrong, she’ll either deny them or blame someone else.

Every person and every company makes mistakes. The important part, and the way to judge someone’s integrity and business savvy, is what they do next.

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Steve Jobs would admit when Apple made mistakes. “But we learned from it,” he would say.

I encourage the executives I work with to admit their mistakes. The first chapter of my new book, “How Not to Hire a Guy Like Me,” starts with my encouragement of presidents, CEOs or owners of businesses to admit their mistakes. While my book is based on lessons learned from CEOs’ mistakes, my readers can’t begin to handle the problems facing their own companies until they admit their mistakes.

When Steve Jobs introduced the iCloud in 2011 in one of his famous keynotes, he dealt with the elephant in the room — Mobile Me — straight on and with humor. Everyone in the room knew that Mobile Me had been a failure and had been clobbered by its competitors. The iCloud was the new product Apple was introducing in its place.

As he was introducing iCloud, he said, “You might ask, why should I believe them? They are the ones that brought me Mobile Me. It wasn’t our finest hour — let me just say that. But, we learned a lot.”

Many people, perhaps men in particular, worry that admitting their mistakes will make them look stupid. Well, what happens when they don’t admit their mistakes and they get found out? Then they look foolish and deceptive.

But if you admit your mistakes, people will trust you and respect you as a leader. And trust and respect are important to building strong business relationships with your employees and customers.

I tell a story in the book about a CEO that refused to admit when he made a mistake, choosing instead to gloss it over. That refusal ended up costing the company $8 million. See what I mean about learning from CEOs’ mistakes? That one was a doozy.

We are all going to make mistakes. They can actually be turned into opportunities. As Albert Einstein said, “Anyone who has never made a mistake has never tried anything new.”

The most important part is admitting the mistake and then to follow Steve Jobs’ example: learn from it. And move on.