Scandals and Company Culture

Years ago a court judge in New Zealand was convicted of expenses fraud, the judge’s defense was that he hadn’t understood what the forms required. The public reaction was disbelief; either he just thought he could get away with it or he was too stupid to be a judge.

Since that early example I’ve looked at company scandals and the explanations given with a suspicious eye. In every case there are signs of how the company culture has effectively colluded around the scandal – it’s never just one person, it’s people turning a blind eye, it’s fear of whistleblowing, it’s the company culture, it’s the CEO.

Following the Enron scandal I heard a story, possibly apocryphal, of a manager who joined the company. Shortly after joining he heard that the ambitious revenue targets had been sent out across the company, requiring a jump of 25% in sales from one quarter to the next. At the end of the next quarter, to his amazement, those sales targets had been met across the company. He smelt something rotten and decided to update his CV and move on, he was not surprised when the Enron scandal broke. At the time it was the biggest corporate bankruptcy the world had seen. The Sarbanes-Oxley Act was passed to prevent scandals of this scale ever happening again (it didn’t).

In the Bernie Madoff Ponzi scheme his family members were involved in the company, including his brother who was appointed as Chief Compliance Officer. There are rules in many companies about potential conflict of interest when partners or family members work together.

More recently Wells Fargo came under fire for the cross-selling scandal where staff opened credit card accounts for non-exisiting clients in order to meet targets. In companies employees focus on what gets rewarded; and when enough pressure is applied from their bosses and their colleagues some will break rules to meet those targets. The company directors’ failure to halt the scheme was called “gutless” by Elizabeth Warren – the company maintains that the employees – all 5,600 of them (so far) acted alone. Either the bosses knew or they should have know, but so far none have taken responsibility.

John Oliver’s piece on the US police system exposes the myth of the “one bad apple” and looks at some of the systemic issues behind the fatal police shootings in the US. The failures of process and policy erode the public trust in the police, reducing their ability to their job.

The points John Oliver makes could equally apply to businesses.

  1.  Leadership
    Your leader must lead, her actions must demonstrate her high ethical standards and she should speak clearly and frequently about the company’s ethics.
  2. Monitor/Collect data
    We can now analyse data and patterns of performance, look at patterns and changing patterns. At a financial institute I worked at we were required to take a break of at least two weeks. HR sold it as being good for employees but my security colleagues gave another explanation, the two week break was long enough to highlight any odd activities.
  3. Avoid conflict of interests
    Keep review processes independent, external if possible. Don’t hire siblings or partners into the same field. Declare any outside interests that might raise a red flag – I wrote some columns for a (former) supplier. I had to declare this and I donated the income to charity to remove any potential conflict. Independent reviews make a difference
  4. Transparent Processes
    The more open you are, the more public you can be about your processes, the less opportunity there is for fraud or scandal. A very simple example; some universities are using blockchain to certify their qualifications, as that becomes a public record there is no chance to create a fake degree.
  5. Rewards
    Be careful what you reward, that will direct the employee’s focus and in extreme cases leads to unethical behaviour to reach stretch targets.
  6. Whistleblower procedure
    Even with all the best practices in place something could go wrong. Create a robust, independent whistleblower procedure.  Whistleblowers are generally punished for coming forward, be the exception.

Building a scandal resistant company culture is not easy; not doing so is expensive, even fatal.

Image: Shhh  |  philm1310 via Pixabay  |   CC0

At the going down of the sun and in the morning We will remember them.

CM2017_02_remember.pngSo in amongst the one hundred and ninety eleven crazy things coming out of the White House was the President’s statement regarding Holocaust Remembrance Day. (I’d link to the official version but it seems to be removed from the White House site). The statement managed to omit any mention of Jews, genocide or anti-semitism. This is not an “honest mistake”, and no Trump spokesperson has since corrected the error. As Deborah Lipstadt wrote in the Atlantic;

The de-Judaization of the Holocaust, as exemplified by the White House statement, is what I term softcore Holocaust denial.

(It’s worth reading the whole of her article)

Indeed the White House statement refers to “innocent people”, here’s a screen grab I took from the video in the Times article linked above.

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We all know that Jews were not the only people the Nazis sought to persecute and kill, the list of victims includes Roma, journalists, trade unionists, homosexuals, anarchists, priests, intellectuals, the disabled, and many others.  The total death toll of the Holocaust is usually given as 11 million; roughly equivalent to the combined population of New York and Chicago.  The White House seems to be trying to whitewash its message as more “inclusive”, but it cannot be beyond the abilities of White House staffers to write an inclusive message of remembrance and mention Jews. This was a conscious attempt to remove Jews from Holocaust Remembrance Day.

I write this sitting in Amsterdam, a city with a nickname “Mokum” that comes directly from Yiddish.  The legacy of the World War II Nazi occupation of Amsterdam is visible throughout the city. Of the approximately 80,000 Jews living in Amsterdam in 1941 an estimated 80% were killed in Nazi death camps. I am a five minute walk from the house of the most famous resident to share that history; Anne Frank. The National Holocaust Museum is in this city, housed in a former theatre that the Nazis used as a holding centre for Jews about to be deported. There are monuments and subtle memorials around the city, on the Nieuwe Keizersgracht the names of those removed from their homes on the opposite side of the canal are set into the pavement. This is known as the “Schaduwkade”or Shadow Quay, alongside each name is the name of where they died; Auschwitz, Sobibor, Buchenwald. Places famous for their terror.

The near complete destruction of Amsterdam’s Jewish community is so well etched into the city’s history that I give a silent cheer when I see a menorah, or lights at Hannukah.

There is no forgetting here.

If the White House wants to remind us to remember other victims we can do that.

Under the Third Reich the Nazis;

  •  controlled the media
  • censored the arts
  • burnt books
  • implemented a police state in which arrests were arbitrary.
  • eliminated freedom of speech
  • eliminated freedom of the press
  • removed the functioning judicial system and established a court system that would deliver verdicts as instructed.
  • arrested and killed those who opposed them, often without a fair trail (yeah, that happens in a police state).
  • incarcerated millions of people and forced those they didn’t kill to live in starvation.
  • labelled those incarcerated with a coded triangle to represent their “crime”.
  • saw a mass exodus of Jews and other minorities who felt at risk from every territory they invaded, (and the world did not always accept those refugees, those who worked to get people to safety are remembered as heroes)

So yes Mr Trump and your cronies, on Holocaust Memorial Day we remember what was destroyed under the Nazi regime. All of it.

There will be other memorial days, most countries have their own war memorials and many Jewish communities around the world observe Yom HaShoah. The world is watching the US right now, in horror. I watch and hope that our descendants do not need to create new memorials for the outcomes of this current regime.

 

Post Script; I usually avoid politics and religion, but as I sat down to write a serious post on communication and technology this was the only thing that I could write about. Normal posting will resume next week. Maybe. 

 

Image: Holocaust Memorial 2  |  Ian Southwell  |  CC BY-NC-ND 2.0

Maths is Hard

There are variations on this maths meme, some have a cowboy theme, some have hamburgers, but the most recent has snowflakes on it. It doesn’t matter the solution is the same. Here’s the meme;

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I saw this on Facebook and beneath it are thousands of comments with a range of answers, the six most common answers were; 15, 16, 17, 25, 60 and 70. Here’s the breakdown of the last 122 responses on the meme I saw.

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The right answer is there, but it’s one of the lower scoring answers. So how are so many people getting it so wrong?

There are three errors people can make; two are observational, and one is to do with a convention in maths relating to the order of operations.

Here’s how to solve it.

Step 1 Snowflakes;

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3 snowflakes = 30, so 1 snowflake = 10

Step 2 Candy Cane;

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1 snowflake + 2 Candy Canes = 20, so 1 Candy Cane = 5

Step 3 Wine;

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1 candy cane + four glasses of wine = 9, so one glass of wine = 1

I think this is the first place people make mistakes, they solve this equation as “wine= 2” which ruins their chances of solving step 4.

Step 4 Final Equation;

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Candy cane = 5, 1 glass of wine = 1, snowflake 10, so the equation becomes;

5 + 1 x 10 = ?

Which looks really really easy, and if you put it into a calculator it gives you just one answer not 6, so what goes wrong?

Some people don’t notice that it’s a multiplication sign, and add it up to 16 – or 17 if they didn’t notice that it was just one glass of wine.

The next thing is that there is a maths convention around the order of operations that I learnt as “BODMAS”, which means that there is a correct order to do the addition and multiplication in. Multiplication comes first.

So the answer is 15. (Don’t believe me? Try putting it into a calculator.)

If you don’t use BODMAS, then you get 60 – or 70 if you didn’t notice the wine glass.

So that accounts for the correct answer and 4 of the most common incorrect answers.  The least common incorrect answer is 25, which you get if you use  the BODMAS convention but don’t realise there’s only one glass of wine.

Only 12% of my (not very random) sample got the right answer. The overwhelming majority 84% did not know/use the BODMAS convention, but presumably went to school at some point. Maths teachers the world over have been crying into their wine seeing the answers.

I’ve summarised the possible wrong answers into one handy image. Feel free to share.

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Now awaiting the American correction of the title.

Image: Math via pixabay

2016; What a Year

 

Well, wasn’t it?

There is the ongoing Syrian war, a humanitarian crisis as desperate migrants try to cross the mediterranean, there is a war in the Yemen, unrest in Iran, instability in the EU, Brexit, attacks in Nice, Turkey, Orlando and Germany, the continuing rise of the Islamic State, the election of Trump, clowns got creepy, a long list of celebrities who died this year, and to cap it off the word of the year is “post-truth“.  The Olympics usually cheer everyone up but even that had its moments with the diving pool changing colour, sexist coverage, and a certain US swimmer having his own “post-truth” moment.

The old news adage “if it bleeds it leads” is true, and the news cycle is so short and so global it feels like there’s blood all over my screen some days. Add to that the contentious comments generated on social media by much of the news and it has been pretty hard to read at times.

But did anything GOOD happen in 2016?

Ebola Vaccination

In 2014/2015 there were a series of Ebola outbreaks in east Africa with almost 30,000 cases reported and more than 10,000 deaths. This debilitating deadly disease now has a vaccination and the epidemic was declared over by WHO in June to little fanfare. Kudos to the scientists that quietly got on with developing the vaccine, and the bureaucrats who did their job to get it into the field. The medical teams – made up local and international experts – that stayed and treated the patients knowing that not much could be done and that a third would die are heroes.

Columbia at Peace

After 50 years of war, deaths of 220,000 and 6M displaced people there is a peace accord signed between the Columbian state and the FARC rebels. It’s now ratified by the parliament, and the President was awarded the Nobel Peace Prize with a citation that includes “The award should also be seen as a tribute to the Colombian people who, despite great hardships and abuses, have not given up hope of a just peace, and to all the parties who have contributed to the peace process.”

World Poverty Declined

By 58%, 74% or 5.6% depending on the measure used. The big difference in the numbers is due to differences in methodologies, the first two look only at income, the last at a more multi-dimensional view of poverty. Which ever is used millions of people are no longer living in poverty – which is good news. Of course this took more than just 2016, but the announcement was 2016. Small warning – if climate change continues this measure of progress will be reversed.

Animal News

Seaworld stopped breeding orca, Ringling brothers retired their elephants. Pandas were moved from “endangered” to “vulnerable”, making them a step further away from extinction.

Heroes

There’s a saying that when the going gets tough the tough get going, in 2016 some of the people who got going have achieved amazing things here are a few of my heroes for 2016.

MSF; this year and every year. They continue to provide emergency healthcare to people in the most vulnerable parts of the world. This year their difficulties have included bombing of their hospital in Yemen.  Their work continues in 2017, you can support them.

Ebola doctors & nurses; as above

Proactiva Open Arms; in 2015 a bunch of Spanish life savers decided to use their skills to rescue those flying Syria and trying to cross the Mediterranean and find safety in Greece. Since then they’ve expanded their operations to large boats and more areas and rescued thousands. They’re not the only group doing this, while governments stand by, and all those making the ocean rescues are heroes. You can support them.

We usually think of heroes in terms of those putting their lives at risk but there are thousands of people who have opened their hearts, and their homes, to support others in more need.

Dirty Girls of Lesvos, Knit Aid, Homes for Refugees, and there are more groups supporting the refugee crisis; here’s a long list.

I’ve gone on about the refugee crisis because it’s the biggest and most immediate humanitarian challenge we face. But there are other candidates…

Geena Davis, for establishing the Geena Davis Institute on Gender in Media and continuing to work on the visibility of women in the media using the strap-line “If she can see it she can be it”.

The writer of the powerful victim statement in a rape case in the US, showing the insanity of the criminal process that still favours the rapist, especially when the rapist is a young white man with a bright future ahead of him. On the same note Lady Gaga for her haunting performance at the Oscars, and everyone involved in the making of “The Hunting Ground” exposing rape culture on campuses in the US.

On a lighter note; big thanks to all the people behind the Joebama memes, providing a light-hearted release during the US election insanity.

So there’s the good news and the heroes from 2016. Welcome to 2017.

Image; Clown – Ugo Rondine Exhibition, Rotterdam | Louisa Mac  |  CC BY 2.0

Where Did the Honesty Go?

CM2016_10_honesty.pngOn Thursday afternoon last week I went to take some money out of an ATM. I had to wait in a queue, but when it came to my turn I saw that the person ahead of me had forgotten to take the cash with him.

I took it, and turned looking for the guy, who had by then crossed the road. I shouted, but my voice was lost in the traffic. I made my transaction and raced after him on my bike. I couldn’t find him and after about 15 minutes I gave up and went home.

It wasn’t a small amount, so I contacted the bank via a twitter DM. Based on that discussion I went into a bank branch on Friday to hand in the money. I had to wait. No big deal, I simply read a book, until a very grumpy man began shouting at me (not kidding), I didn’t understand what his problem was but offered to move “Yes move” he shouted. I moved, other customers were as astonished as I was.

It was pretty busy, and the bank staff came to check on what everyone needed as a sort of triage to help people faster. I explained; “Please wait” I was told

I waited.

My turn at the desk came, and it took a phone call and a bit of searching to figure out what to do, apparently this is not a usual situation. I gave them all the info I could, including my own transaction information so that they might be able to track down the poor guy who missed out on his cash.

The bank gave me a small thank you gift in appreciation – super kind of them and certainly not expected.

Now here’s the bit that really struck me. Everyone I encountered was surprised at what I was trying to do. The initial messages on twitter begin with “Wauw” (Dutch for “wow”), the clerk I spoke to reported that the previous customer had heard my statement and commented that “she’s still here having been yelled at trying to do the right thing – we need more people like her”, the clerk herself thanked me and when I said it was what my mother taught me added “we need more mothers like yours”.

Here’s the thing; the money wasn’t mine.

A million years ago I found a watch on a public path, my parents took me to the local police station to hand it in. Some months later the watch hadn’t been claimed and it was returned to the finder – ie; me. I don’t remember what happened to the watch after that, it was a large, man’s watch and not really my style. But the lesson was learnt, if it’s not yours you don’t just take it, you try to get it back to the owner.

So I tried to return the money, and apparently this is so unusual that people are surprised. It’s the honest thing to do. Indeed to me it was the only thing to do.

Does this mean that any of those other people would just have taken the money? Would you have taken it?

Do we really need my mother out there teaching people about being honest and not taking things that aren’t theirs? She’s up for the job I promise you.

When did honesty become so surprising?

Image: Untitled  |  Jane Cockman  |   CC BY-NC 2.0

Externalities

CM2016_10_externalities.pngI did just one university course in economics and learning about externalities was pretty much my favourite thing. Suddenly it explained a bunch of things that are wrong with how consumerism works. I still see externalities behind a number of environmental, business and humanitarian issues. In fact globalisation and our use of digital make things worse rather than better.

A quick definition; an externality is a consequence of an economic activity experienced by someone else. The consequence could be positive or negative.

The most common example of a positive externality is the beekeeper who benefits from the neighbouring orchard. Since both parties need each other this seems closer to a symbiosis in biological terms but for the economists it counts as a positive externality.

A common example of negative externality is rubbish; in the above picture the rubbish has a negative impact on the environment, on any business relying on the environment. However the neither the producer of the containers, the restaurant packaging it’s food, nor the consumer making the purchase and dumping the packaging take responsibility for disposing of the rubbish and the cost of clearing it will probably fall to a government entity.

We, as a society, try to limit externalities by putting rules in place to limit the effect, and by providing services – well placed rubbish bins on a beach for example. All of which is funded by taxpayers. This more or less works on a local level.

Globalisation

On a global level it doesn’t work out so well.

My mobile phone was probably manufactured in China and used components or elements extracted in a dozen other countries. Some research indicates that up to 50% of the pollution from a phone production occurs at the first step. There’s a long and complicated chain of manufacture but I’m pretty sure zero eurocent of the amount I paid for the phone made its way back to the mines in the Democratic Republic of Congo where coltan.  (Oh wait, I paid nothing for my phone.)

Digital World

Our digital world is creating brand new externalities we haven’t thought about.

Yep, the Pokemon craze is laden with externalities, that’s why museums, locations, city councils, traffic controllershealthcare officials and governments are making a fuss.

In the Netherlands one tiny town, Kijkduin, has been somewhat over-run by Pokemon players, they’re trying to get Niantic to change the game to reduce the number of Pokemon in the town, they’ve found the numbers overwhelming, and there’s a risk to a neighbouring nature area. The town has already put up more toilets and rubbish bins to cope with the crowds. The cost of that is an externality. It’s a cost the small town is paying for the consequences of Niantic’s popular game.

If I were organising events in the town with such a large attendance I’d need a permit, there’d be a fee, and I’d be the one paying for security and clean up.

So when globalisation and digital collide the potential externalities grow, and right now we don’t seem to have a good way of handling them.
Image: Pollution 2  |  Kim Etherington  |  CC BY-NC-ND 2.0

How Dumb are Those Rules?

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I’m not a fan of bureaucracy, I try to avoid, reduce or eliminate it when it’s in my power to do so. However I’ve also worked for large companies where a certain amount of bureaucracy is inevitable and I’ve worked in regulated industry where the regulation is there there for a reason; to protect the health or the finances of customers.

So when I came across and article that talked about 10 dumb rules that make your best people quit I was initially cheering.  But some of those rules are there for a reason; sometimes the reason is the law and sometimes it’s a real risk and sometimes it’s just that not everyone is honest. So I decided to unpack the rules further think about the reason companies put such rules in place and discuss how there might be a different way to work with such rules.

1. Dumb rules for hiring.

This is a lament about the black hole a resume goes into when you apply for a job. I absolutely agree with this, the process used by many companies is so disrespectful. It is not difficult to make a humane process for handing job applications, whatever the size of your company.

  • Respond to every application; since applications are made online this is an email. It can be a standard email for those who don’t make the shortlist.
  • When people make the shortlist or the short-shortlist and have been unsuccessful at the interview stage send a personal email saying what was missing.
  • Be clear about the decision timeline and stick to it.

My best recruitment experience was one where I did not get the job.  Since then I’ve tried to follow that example – that might be a separate post for a later date.

2. Dumb rules for performance reviews

“Performance reviews are a waste of time. Brilliant and talented people deserve better than being slotted into some bureaucratic five-point scale once a year.” begins the complaint on performance reviews. I agree, but performance reviews aren’t about feedback.

In a large company you need to find a fair way of distributing the rewards, aka pay rises, and the performance review system is what has evolved to fulfil that task. I have written about performance management before and agree that it’s a flawed system; it’s not always fair, and even when people get good reviews they don’t like the process. Some companies are testing other methods, moving away from rigid review and stacked ranking systems. However all companies need to find a fair way to judge the performance of employees.

I think it needs to change. In the meantime managers can improve the process for teams by giving feedback throughout the year, and by being honest about the purpose of the dreaded performance review.

The article ends this subject with “Trust them to produce, and if they are not producing let them go” it’s not that easy under EU law to just let people go, and I think if you’ve hired someone and they are not performing you have a duty to coach for improvements.

One last reason to have a system that attempts to be fair; lawsuits.

3. Dumb rules for onsite attendance.

Agree. With the tools we have available now onsite attendance can be optional in many jobs. I’ve always agreed to work from home agreements for team members. That trust has been more than rewarded; it’s meant that one team member avoided 6 hours of commuting per week, another could extend time with his family in his home country, and a colleague could help a sick relative. I have never seen any decline in work delivery – if anything the team members feel more dedicated.

I have often connected with the team member via some chat app. Not to “check up” on them, but to emulate the office situation and maintain a connection.

This came easily to me, perhaps because I’m used to working online, for many managers new skills might be needed.

4. Dumb rules for approvals

“Do you really want your best workers to spend their time chasing people for rubber-stamp approvals?”

Oh man. This is one of my biggest complaints. At one company I had authority to make spending decisions on items in the tens of thousands but would have to get a 20 euro expense invoice approved before it was re-imbursed. In another I had a team member based in another country – the CEO of that country organisation had to approve her expenses that were being paid from my budget. (He did, and after the first time it was no issue).

This comes down to regulation. If you’re in a publicly listed company accountancy rules come into play and the company has to double, or triple check expenses and spending to ensure there is no fraud. Even though the company knows you’re trustworthy they can’t actually trust you.

Although I understand the need the approval request systems make me grumpy.  my team used to make jokes and take me out for coffee after I’d been filing expense reports. Perhaps the answer is coffee vouchers for every approval request?

5. Dumb rules for time off

“If a dedicated employee doesn’t feel good enough to come to work, what’s the point in making them drag themselves out of bed to get a doctor’s slip?”

Here’s a win for the European way! I think it takes six weeks absence before a doctor’s note is needed. Absences are monitored, repeat absenteeism is a sign of stress or longer term health issues. But the Dutch system is sensibly generous about this.

6. Dumb rules for frequent flyer miles

The article assumes that this is a reward for work travel, and should accrue to the employee doing the travel. That’s the system I’m used to here, but I have also worked for a government department where we could not legally accept frequent flyer miles. But then no-one could which is annoying but fair. I also know of one company that collates them and reshares them across all employees. Work travel in that company is usually only by senior people and is widely seen as a benefit and the idea that should only accrue to senior managers seems unfair to them.

I’d stick to it as a reward for work travel if I were making the rules, but it’s not a deal breaker in the grand scheme of things.

7. Dumb feedback methods

“I have worked with companies that put complete faith in employee engagement surveys, but frankly I believe they’re a sham.”

Agree. Having worked for a financial services company right through the financial crisis and seen the outcome of annual engagement surveys I noticed that the engagement scores trailed the fall and rise of the share price.

screen-shot-2016-10-18-at-15-10-03Few companies consider the cost of conducting an big scale engagement survey. In a company of 100,000 employees it could be 15-20 full time employee equivalents to complete it (assuming 70% response rate), do you get a commensurate value of improvements?

I’ve worked through the feedback process numerous times, and it becomes so complex and unwieldy that little is really achieved. I think you could do more by talking to people, using smaller targeted surveys, asking for feedback on your sites, and making smaller – more useful – changes.

8. Dumb rules for cell phones

Apparently some companies make staff check their phones in as they enter the company. I haven’t encountered this, although I have been asked not to photograph or record in certain areas of a company. I can understand the need in, for example, the design lab at Apple. But it’s not a rule that shows trust in employees, for most companies it’s overkill.

9. Dumb rules for internet use

I’ve seen Facebook and LinkedIn banned, and in fact blocked from company computers out of a fear of what employees might post. Well it just shifts the problem to out of work hours. A better solution is to talk to employees, make it clear what can and can’t be posted online. Employees can understand that discussing client information, sharing company results early, or dissing their manager might be a problem. Even better give them some good news to share!

10. Dumb probationary rules

Many organizations still have the throwback rule that employees have to be in a position for six months before they can transfer or be promoted”

While I’ve never come across a defined limit I can understand that in general as a manager you want people in the job you hired them for, it’s a pain in the neck to re-hire people all the time. My personal attitude is that if a person wants to move then it’s time for them to move – regardless of my assessment of their abilities or performance. I’m far more likely to recommend someone who has performed well for 18 months, than someone who’s been in the role for 3. But the roles I’ve managed have expertise levels that require a bit of learning. I might feel differently about managing wait staff in a restaurant for example where the skill set is simpler and success is more a question of personality.

I don’t love the bureaucratic rules, but having worked in regulated industries I grudgingly admit that I can usually understand the business need. That makes it possible for me to adapt and find the smartest process that will work for everyone – most of the time. Of course I still get frustrated, but then I take a coffee break and move on to the real work.

Image:  Law books  |  Waikay Lau  |  CC BY-NC-SA 2.0