Managing risk vs. managing people

6 05 2016

“The biggest risk is not taking any risk… In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” ~ Mark Zuckerberg

We all have different risk tolerances.  Some of us (usually younger) like to play their retirement in the stock market, and others like to keep their retirement in a much safer state, worrying that a dip in the market might hurt their closer-to-cashing-out retirement fund.  Because, after all, you don’t actually LOSE any money that’s invested in the market until you cash it out.  Keep in mind that those wailing and gnashing their teeth when the Dow was below 6,900 in 2009 (and buying low with every paycheck deduction – don’t forget that) now have more than doubled their fund balance, with the Dow near 18,000.   Only those who sold their stocks in a panic in 2008-2010 realized an actual loss (assuming an index fund vs. individual stocks, of course).

As leaders, we have to take risks, too.  When we create a budget, we have to make an educated guess, and risk being wrong either on the high or low side.  If we go conservative, then we budget for a smaller amount of money, and possibly have to RIF more folks than necessary (then rush to try to hire new ones!).  If we go optimistic, no RIF’s happen, but we increase the odds of missing our budget (do that too often and you no longer have a job).  We take risks when we give an employee a break.  We risk them making the same mistake, or doing something worse.  On the other hand, we can just fire them, and risk hiring someone who was nowhere near as good as the one we let go hastily.  Risk just comes with the territory, and the higher you go in the leadership chain of command, the more your job is about managing risk, and less about managing people and processes (i.e. your team is more skilled, and needs less hands-on management).

Speaking of risky…


Rubes cartoons used with permission.




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