Business Banking E-Newsletter - November 2013

10 Common Communication Mistakes

Avoiding Communication Blunders and Misunderstandings

It can be embarrassing to make mistakes with communication. For example, if you send an e-mail without checking it, and later realize that it contained an error, you can end up looking sloppy and unprofessional.

Other communication mistakes can have more serious consequences. They can tarnish your reputation, upset clients, or even lead to lost revenue.

In this article, 10 common communication mistakes, and what you can do to avoid them, is explored. 

Mistake 1: Not Editing Your Work

Mistakes with spelling, tone, and grammar make you look careless. That's why it's essential to check all of your communications before you send them.

Don't rely on spell-checkers: they won't pick up words that are used incorrectly. Instead, proofread your work and use a dictionary to look up any words that you're unsure about.

You may find it helpful to make a list of words and phrases that you find hard to get right (such as "your/you're," "its/it's," or "affect/effect"). Store this close to hand.

It can be difficult to see errors in your own work, so consider asking a colleague to look over key documents before you distribute them. Alternatively, read your work aloud – this makes it easier to catch typos and tone errors. Then, give yourself time to reflect on your document and make any final changes.

Mistake 2: Delivering Bad News by E-mail

Would you announce layoffs to your team by e-mail or IM? If you do, you could upset everyone! Written communication channels don't allow you to soften difficult messages with nonverbal cues (such as body language), and they don't allow you to deal immediately with intense emotions.

If you need to deliver bad news, do this in person, and think carefully about how you can do it sensitively, so that you can convey your message but minimize long-term upset at the same time.

When you deliver a difficult message personally, you can pick up on signs that people may have misunderstood key parts of your message, or may have taken the information particularly badly. You can then take steps to clarify your message, or help people deal with the difficult news.

Mistake 3: Avoiding Difficult Conversations

At some point, you will need to give negative feedback. It's tempting to try to avoid these conversations, but this can cause further problems – in particular, you may let small problems grow into big ones.

Preparation is the key to handling difficult conversations. Learn to give clear, actionable feedback, and use tools such as the Situation – Behavior – Impact technique to encourage your people to reflect on their behavior.

You may also want to role-play your conversation first, so that you feel confident in both your words and your body language.

Mistake 4: Not Being Assertive

Assertiveness is about stating what you need, while considering the wants and needs of others.

You may not always get your way when you're assertive, but you stand a better chance of getting it, or of reaching a compromise, because you've been clear about your needs. Assertiveness also means saying "no" when you need to.

Note: Assertiveness is not the same as aggression. When you're aggressive, you push to get your own way without thinking about other people's rights, wants, and needs.

Mistake 5: Reacting, not Responding

Have you ever shouted at a colleague in frustration, or sent a terse reply to an e-mail, without thinking your point through? If so, you're likely to have reacted emotionally, instead of responding calmly.

This kind of emotional reaction can damage your reputation. You may upset people with your strong emotions, and give the impression that you lack self-control and emotional intelligence.

Mistake 6: Not Preparing Thoroughly

Poorly-prepared presentations, reports, or e-mails frustrate your audience and, over time, damage your reputation. This is why it's essential to prepare and plan your communications carefully.

First, set aside time to plan your communication thoroughly. Consider using tools like the Rhetorical Triangle and Monroe's Motivating Sequence to create a credible, intelligent, and compelling message that appeals to your audience's emotions, as well as to their intellects.

Leave time to proofread, to find images, and to check that documents are compatible with your audience's software. Then, if you are delivering a speech or a presentation, rehearse thoroughly, so that you are fluent and inspiring.

Mistake 7: Using a "One-Size-Fits-All" Approach to Communication

If you use a "one-size-fits-all" approach to communication, you may overlook people's different personalities, needs, and expectations. In fact, your communications need to address those differences as much as possible.

If you're preparing a presentation, make sure that you appreciate that people have different learning styles, and that you cater for these. This means that everyone – from those who learn best by reading to those who prefer a more hands-on approach – can benefit from your session.

Mistake 8: Not Keeping an Open Mind When Meeting New People

Today's workplace is a melting pot of ethnicities, religions, ages, sexual orientations, and viewpoints. These differences create a rich tapestry of experiences and opinions that greatly enhance our lives.

However, it can be tempting to stereotype new colleagues or clients, or to make assumptions about them based on just a few pieces of information. This is especially true if you haven't had much time to get to know them well.

Assumptions inhibit open communication, because you don't consider the other person's own unique background, personality, and experience. Over time, this can jeopardize your relationship with them.

So, set time aside to listen when you meet someone new. Give them space to talk about their viewpoints, and take time to absorb these.

Then, learn how to manage cultural differences, so that you take each person's needs and expectations into consideration. If you often work with people from overseas, explore the idea of cultural intelligence, so that you can start to adapt your behavior when you come across people from different cultures.

Mistake 9: Assuming That Your Message Has Been Understood

Always take time to check that people have understood your message.

For example, when you send out an e-mail, you could encourage people to respond with questions, or to reply if they haven't understood part of your message.

Or, if you've given a presentation, build in time for people to discuss your main points, or leave time for questions at the end.

Tip: To check that you've been understood correctly, use open questions that start with "how," "why," or "what." These encourage reflection, and will help your audience members to explain what they, personally, have taken from your communication.

Mistake 10: Accidentally Violating Others' Privacy

Have you ever forwarded a sensitive e-mail to the wrong person, or sent an incorrect attachment? These kinds of errors can cause serious commercial problems, violate people's privacy, and lead to embarrassment and confusion.

To avoid these problems, write sensitive messages before you select the recipient, and then double check their e-mail address. If your e-mail program automatically fills in e-mail addresses, you could switch this feature off, so that you must consciously choose the right recipient.

You may find it helpful to draft these e-mails in a word processing document or blank e-mail, and then to paste the text into a new message. This way, you won't accidentally include any information from previous messages.

And, if you're sending a sensitive or confidential attachment, check that no "tracked changes" or comments can be found, and make sure that you're sending the right version.

Key Points

Everyone makes communication mistakes from time to time. However, you'll protect your reputation if you avoid the most common errors, which include not editing your work, accidentally violating people's privacy when forwarding e-mails, and not being assertive.

The key to good communication is to think about your audience's needs. Prepare each e-mail, document, and presentation carefully, and give yourself time to check it.

Above all, remember that communication is a two-way process. Be ready for questions, and listen to what your audience has to say.

Over time, you'll find that good communication can greatly enhance your working relationships, and your job satisfaction.


How to Ask Your Bank for Money

The process of asking for money is deceptively straightforward, but as in most things, the details matter. It is a good idea for business owners who are applying for a loan from their bank to include a simple attachment — a summary, written in very direct language — along with the bank's required form.

Remember, you are not selling your business as an investment vehicle for the bank. You are creating confidence that the bank's money will be repaid. And to gain that confidence, they need to understand several things at a basic level.

1. What Your Business Is

On your first page, explain the market you serve, the competitors in that space, the value you bring, and why your business will be successful. Do it all in one page: Your banker is smart, but busy. This has to be a business that your banker and the loan committee can easily understand, so that they have enough confidence to lend money. Simple and short is better.

2. How Much Money You Need–And How You Will Use It

It is fine to make a simple list of items and the associated amounts of money. Possible items on your list: equipment to purchase, a marketing campaign investment, a new facility build-out estimate, and working capital to support payroll and other expenses. Be sure to attach supporting budgets.

3. How You Will Pay the Money Back

As the applicant, you have to make estimates: how much money will come in, how much will go out, what will be left over, and how that all relates to loan repayment terms. Remember, the loan committee's first responsibility is to lend money to people who will repay them with interest. That means their No. 1 concern is how and when the money will be paid back–not how great your business will be in general terms.

4. What Happens if Things Don't Go as Planned

What is the bank's fallback position if the market changes or the business falls short? Is it a guarantee from you, or a partner with collateral? Or maybe it is a loan guaranteed by the SBA or supported by a local or state program for business — but regardless, you need to address this in your documentation.

5. Who’s Running the Show

You are not just pitching the business; you’re building confidence about your leadership and your team's skills. Provide a team profile that shows the lender's money will be well managed.


Here's where you include the numbers — budgets, forecasts, past financial performance — and any other supporting materials for the previous items.

Investors and lenders are similar but not the same. When asking for money from a lender, the approach is different. The investors are focused on how much they will receive for the money they invest. But lenders want to know the risk of not getting their money back. One is about upside; the other is about avoiding downside risk. For the banker, your approach is about confidence in repayment.


5 Ways to Build an Extraordinary Team Culture

When your employees work together to achieve common goals, everyone wins--you, your business, and your customers.

Employee teams are one of the best ways to get things done in any business. When you take a group of independently talented people and create a team in which they can merge their talents, not only will a remarkable amount of energy and creativity be released, but their performance, loyalty and engagement will be greatly improved.

Here are five steps for building an extraordinary team culture:

1. Create a Team-Oriented Organization

Make teamwork one of your core company values, and put a clear emphasis on self-managing teams that are empowered to make their own decisions. Don't just talk about teamwork. Show your employees the seriousness of your commitment by giving teams the authority to get their jobs done on their own terms, while ensuring they accept responsibility for the results.

2. Assign Serious Team Goals

Give your teams really important assignments and projects, not just planning for next summer's annual company picnic. Bring teams in when you're looking at new trends in the market or need to see things through new eyes. It's important to mix it up and not have the same people making the same decisions all the time. Ask them to challenge the status quo and the conventional wisdom. This will help to keep your company fresh and ahead of the game.

3. Encourage Informal Teams

More work in organizations is accomplished through informal teams than formal ones. It's therefore in your interest to encourage the proliferation of informal teams throughout your company, addressing any and all issues and opportunities that capture their interest. When your employees are able to tackle concerns themselves, without elevating every little decision to top management, you'll have a much more efficient organization.

4. Cross-Train Employees

When employees understand how different areas of the company work, they are more apt to make decisions that benefit the company as a whole, rather than solely their own department or group. Give your employees the opportunity to learn other people's jobs. Some organizations go as far as switching employee roles on a daily, weekly, or monthly basis. And don't forget your managers; have top executives spend a few days working on the front lines with customers or directly with your product. They'll have a new appreciation for what your regular employees go through on the job.

5. Provide Team Resources

No matter how talented a company's individuals might be, teams cannot be successful without the proper resources. Teams need a designated and available place where they can regularly meet. Nothing much can be achieved in an over-crowded lunch room. All employees need to be given adequate time to devote to their team meetings, with no grief from supervisors. Make sure to supply your teams with an appropriate budget if required, and the permission--with guidance--to spend it as they see best for the company.


Five Ways to Help Measure Investment Risk

Investors who are concerned about market volatility should examine their investment choices from all angles when constructing a portfolio -- evaluating not only return, but risk as well.

There are a variety of risk measures that may come in handy. Of course, numbers don't tell the whole story, but they may help you determine whether owning a particular investment is consistent with your personal risk tolerance. You and your financial advisor may want to review the following risk measures:

  1. Alpha is a measure of investment performance that factors in the risk associated with the specific security or portfolio, rather than the overall market (or correlated benchmark). It is a way of calculating so-called "excess return" -- that portion of investment performance that exceeds the expectations set by the market as well as the security's/portfolio's inherent price sensitivity to the market. Alpha is a common way to assess an active manager's performance as it measures portfolio return in excess of a benchmark index. In this regard, a portfolio manager's added value is his/her ability to generate "alpha."
  2. Beta is the statistical measure of the relative volatility of a security (such as a stock or mutual fund) compared to the market as a whole. The beta for the market (usually represented by the S&P 500) is 1.00. A security with a beta above 1.0 is considered to be more volatile (or risky) than the market. One with a beta of less than 1.0 is considered to be less volatile.
  3. R-squared (R2) quantifies how closely a fund's performance has mirrored a benchmark index. The value of R2 ranges between 0 and 100. The closer it is to 0, the less the fund's returns "correlate" to its benchmark. The closer it is to 100, the more the two have moved in tandem. For example, you may expect the returns of a large-cap fund to be closely aligned with the S&P 500, and thus have an R2 closer to 100.
  4. The Sharpe ratio is a tool for measuring how well the return of an investment rewards the investor, given the amount of risk taken. For example, a Sharpe ratio of 1 indicates one unit of return per unit of risk. A Sharpe ratio of 2 indicates two units of return per unit of risk, and so on. A negative value indicates loss or that a disproportionate amount of risk was taken to generate a positive return. The Sharpe ratio is useful in examining risk and return, because although an investment may earn higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The higher a portfolio's Sharpe ratio, the better its risk-adjusted performance has been.
  5. Standard deviation is a measure of investment risk that looks at how much an investment's return has fluctuated from its own longer-term average. Higher standard deviation typically indicates greater volatility, but not necessarily greater risk. That is because standard deviation quantifies the variance of returns; it does not differentiate between gains and losses. Consistency of returns is what matters most. For instance, if an investment declined 2% a month for a series of months, it would earn a low (positive) standard deviation. But if an investment earned 8% one month and 12% the next, it would have a much higher standard deviation, even though by most accounts it would be the preferred investment.

Using a variety of risk measures may give you a more complete picture than any single gauge. Your financial advisor can help you decide which ones will serve your needs and assess the risks and potential rewards associated with your portfolio.

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