A tired employee is updating shipping orders late at night at a textbook brokerage. They make a mistake in the code and accidentally ship outdated management textbooks to an important customer. Three days later, classes have begun, and with demanding course loads, the students already feel behind. Many are seeking immediate replacements. Cue the angry phone calls and emails.

Thankfully, it is possible to repair the damage done. In fact, if this delicate situation is managed correctly, the company might actually come out ahead with its customers, a phenomenon known as the service recovery paradox.

The service recovery paradox is a phenomenon in which a customer who experiences a problem with a product or service, but has that problem effectively resolved, is more likely to have a positive impression of the company than a customer who never experienced any problems. Essentially, when a company is able to effectively recover from a service failure, the customer’s satisfaction can actually increase beyond what it would have been if the failure had never happened.

How can your company use this paradox to its advantage? Every department in a company can make a mistake that sends out ripples. It all comes down to your apology message — and how you document, memorialize, and share the apology process both internally and with external stakeholders.

How to Craft an Apology Message

1. Restore lost value.

Your customer believes the balance of “fairness” has been thrown off by this problem. They want to know what you’re going to do to restore the perception of lost value they have incurred. Offer to repair the situation to secure the attention and trust of your customers. If you don’t lead with this step, the rest of the message won’t be nearly as effective.

In the textbook situation, examples could include sending additional resources related to the book that provide additional learning value. Perhaps there are videos, simulations, or other materials the school or students didn’t pay for that enhance the learning experience. The key is providing something that has perceived high value to the customer, but lower cost to you.

2. Acknowledge responsibility.

This doesn’t need to be overly complicated, but it is critical that you distinguish between offering an excuse for what happened and accepting responsibility for the mistake.

After the example coding mistake, pointing blame at another entity, like a supplier or distributor, would cause distrust and derail the apology. Your message has to clearly say that you take full responsibility for ensuring that the problem is resolved in their best interest. That your aim is to regain their full faith and confidence in you as a partner. And that you’re taking proactive and preventive steps to protect them from any further issues.

3. Explain the problem.

Customers want to know you have been able to precisely identify the problem and its root cause. This increases confidence that your proposed fixes will protect them from the same problem happening again.

In the case above, the textbook broker should explain that the code, while always functional, was referencing an outdated set of tables in the company’s database because of a manual coding error. You can acknowledge the mistake, and because you told customers that you’re creating multiple safeguards to fix the problem — tailored to the specific issue — the apology is much more likely to be received well.

4. Describe how you will fix the issue.

In this step, you are specifically explaining how you have fixed the problem and describing what measures you put in place to ensure it doesn’t happen again.

In the textbook example, this could include performing random audits of shipping orders to ensure additional, manual verification, as well as creating redundancies in the coding software that provide further checks on orders — such as checking whether a book going out is more than a year or two old, which could mean it’s a mistake and warrants extra attention. It could also include changing your process to not perform updates during peak busy seasons.

5. Express your regret.

The actual expression of regret (the “we’re sorry” part) is most effective once you’ve sufficiently addressed the concerns above, making your expression of regret even more sincere because it’s backed up with a lot of action. Customers respond better to a sincere apology. It’s important not to lose sight of the fact that your customer’s business was damaged, so acknowledge those effects.

In the textbook example, the broker should say something along the lines of, “We are sorry for the disruption to your business during a busy season for you. Hopefully, you can see and feel our commitment to retaining your confidence and trust. We apologize to both your company and your customers.”

This kind of statement conveys true regret and sincerity while also stressing that the problem is being addressed.

Sample Apology Message

Here’s an example of an apology message to use as a guide. In this case, a company is apologizing to a customer about a software outage that happened during one of their busiest times. It covers all of the critical parts you want to include in an apology message.

I want to attempt to repair any possible problems this outage caused for you, your team, or your employees. First, I have been approved to provide your company with a one-month refund, twice the length of your benefits sign-up period. It is an expanded refund in recognition that this happened at a peak time for your company. I have also directed our customer service team to manually check all sign-ups that occurred after the software came back online to be sure they were captured accurately. I will let you know the outcome as soon as it is complete, no longer than one week from now.

The software outage was entirely our fault. It should not have happened at all, let alone during such a critical time for your business. We take full responsibility and are committed to ensuring it will not happen again.

I fully regret that this outage occurred, and our teams are making the necessary changes to make sure it does not happen again. Our outages should be reserved for planned downtime, with advance communication, and we regret that we failed on both accounts in this situation.

To let you know what occurred, your software went down after a major power outage at one of our data centers. Your workload was rerouted to our other data centers, as part of our backup plan and service agreement. However, the second center your content was assigned to was down due to preventive maintenance and a hardware update. This caused your system to go down for a period as the system reconfigured to find the next alternative for your workload. We have now updated our redundancy system to avoid anything like this in the future.

I am exceptionally sorry for this outage, and as soon as I knew about it, I was in constant communication with our technical teams until it was resolved. On behalf of our company, I would like to apologize not only to you, but to your leadership team and all affected employees.

Document, Memorialize, and Share Your Apology Process

It is critical to explicitly document the apology effort made to the customer. That way, if someone makes another mistake in the future, the company can turn to an objective framework to craft a new apology message. By learning from the company’s past, your employees can avoid what didn’t work and provide better responses to future service failures.

Your apology process should also be shared and shown to outside stakeholders. This phenomenon, known as boundary spanning, is critical to the service recovery paradox because it not only shows vulnerability from the organization, but also shows other customers that the company can be relied upon in times of distress.

Businesses are bound to make mistakes and disappoint their customers. But how you build your apology message and your careful attention to executing it appropriately can make the difference between losing those customers or increasing their loyalty.

“My days are full of turnabouts. I have to go back on promises, reshuffle priorities, and I second-guess too much. It’s wearing on me, and I feel like I am spending hard-earned goodwill,” a member of an executive leadership team told me in one of our sessions. “I want to pause for a moment and talk about how I can be a good leader in a bad economy.”

On paper, this person was being a good leader by enacting tried-and-tested strategies to prepare for an economic downturn: becoming more hands-on and moving closer to their team, setting a faster pace, and asking people to handle bigger workloads. But instead of releasing energy and instilling confidence, these moves were wearing the leader down — and their employees, too. In their effort to build a fortress, they felt like they were about to burn down the house.

This feeling may be familiar to executives and managers who are anticipating a recession on top of the aftershocks of the pandemic. The common thinking is that each crisis makes people stronger and more able to cope. But this is not the reality. Compounding crises tend to make people more vulnerable — and more shaky.

This shakiness poses a formidable challenge. It means that some of the normal crisis responses people turn to won’t work as intended. Indeed, if leaders use the standard playbook as-written, much like our executive at the beginning of this article, they actually risk setting off a destructive spiral and making the crisis worse.

To succeed as a leader in this moment, I suggest three key balances people need to get right: moving closer without suffocating others; moving faster without turning frantic; and taking on or assigning a bigger workload without sacrificing relationships.

Moving Closer Without Suffocating Others

When there are rumblings of an economic downturn, the first response from leaders is often to move closer. More meetings are called, more reporting is required, more detail goes into every conversation. This is quite natural — leaders want to understand what is going on. They want to help find answers. They want to make sure their teams are on track and doing what they can to fix the situation.

Psychologically, however, the impetus to move closer is often a need to feel in control. Moving closer is a risky maneuver and a double-edged sword. On the back of the pandemic, where teams have learned to operate independently and with less oversight, a boss looking over their shoulder can feel like outright distrust and disenfranchisement. It also draws their attention away from doing their job and on to “managing upwards.” The outcome may be stifling instead of stimulating.

Further, if leaders move too close, they clog up their own bandwidth with details and micro-management. The worst-case scenario is when a leader formally takes over their subordinates’ role because they believe they can do better. At a financial institution I was observing, for example, a top leader was so frustrated about the prospect of losing a large client that he marched into a meeting his team was having with them and interrupted the dialogue. He was short of breath, sweating, and agitated, and stood behind his employees to watch and ask questions. He later explained that he was only there to “secure that you do your job right” and to “fire up the crew.” It didn’t work; the company lost the client, citing “a hostile, immature and frantic environment that made them uncomfortable.” The team eventually dissolved, and good people quit their jobs.

To be sure, there are some legitimate reasons to move closer, like when leaders want to ground their judgment in first-hand experience or signal support by showing up on the frontlines. But they must remember that the point of moving closer is to motivate, energize, and support; not control, disengage, or sow doubt. A balanced approach is “touch and go,” engaging with teams on the issues they face, but also not taking the weight off their shoulders and onto your own. A good test is to make sure you don’t end up with a laundry list of things you need to fix for the team, but rather that your team knows their laundry list and understand that they now have control of the steering wheel again.

Move closer — but don’t hover — and have a clear exit strategy. Once you have seen enough, give the power back to your employees.

Moving Faster Without Turning Frantic

The second typical response is a healthy bias for action. In times of crisis, leaders cannot sit on their hands; time is of the essence. You can almost feel it in the jittery pace of meetings, as well as in a leader’s tone of voice or restless demeanor.

However, there is a fine line between urgent and frantic. Leaders must remember that the pandemic has made many people more brittle, not more resilient. Stress and mental health issues have skyrocketed. As a result, while most people understand the need of speed in a crisis, their tolerance for “pushy” leadership is much lower than it might have been prior to 2020.

To address this, leaders should examine the psychological traps they tend to fall into when economic times get tough. One common one is that people think they have less time than they actually do, so they come up with imaginary and self-imposed deadlines. “We need a solution by the end of the month” may create urgency, but if the better solution is another few months away, imaginary deadlines can sacrifice value in exchange for the illusion of speed.

Add to this the fact that leaders often exhibit less tolerance for dissent when things get difficult. They tend to become more ego-centric, so when others object to an idea or proposal, it’s quickly interpreted as resistance and obstruction, not as reflection or constructive feedback. Sooner or later, this pattern of behavior will lead to disengagement from the team and a sense of “false consensus” on ideas. While this might result in faster decisions, it can also hamper independent thinking and prevent better solutions from coming to the fore.

A balanced approach is to create a deliberate delay between ideas, decisions, and actions. Think of it as impulse control by design: Create structures and processes where you allow others (the board, external advisors, peers, or good colleagues) to vet and question your plans. You don’t have time or patience for endless bureaucracy, so design these processes to be fast and informal. Sometimes they can be as short as a quick phone call where you spell out what you want to do and test the immediate reaction of someone you trust.

Increasing Workloads Without Sacrificing Relationships

The third typical response to economic downturns is that leaders become more task-oriented and less mindful of relationships. Just like the frustrated executive earlier in this article, many leaders will ask their teams to take on a bigger workload. To-do list gets longer and longer because “more” feels better and “more” feels like responsible leadership. You might also hear versions of the statement, “We need to fix problems now, not coddle people.” As a result, off-sites are canceled, talent programs are put on hold, perks are cut, and courteousness and empathy go down the drain.

However, relationship work is not coddling; it is hard-core performance management. We have learned from the aftermath of the pandemic that good people rarely quit or “quiet quit” because their job becomes more difficult or because times turn harder. They quit because they lose faith in their leaders, their colleagues, or the future of the company. They withdraw because they feel unfairly treated or neglected. Yes, people go to work to complete the mission and finish their tasks, but more than anything they go to work because of the connection and community they feel they have with their colleagues. So, continue to invest in relationship-building. Maybe downgrade on the luxury, but still spend the time investing in creating connections. Go for five-star content, impact, and interaction, but in a three-star setting.

Part of doing this involves maintaining a balanced approach around relationship and task priorities. Be transparent with your team: What’s the nature and quality of work relationships you expect to see during a tough period? What kind of challenges and supports do you expect of each other? What kind of relationship compromises are you not willing to make, even if they would deliver short-term results? Ultimately, if you find yourself in an extended downturn, take a step back with the team and redefine what success looks like – and not only for the work tasks themselves.

. . .

Being a good leader in a bad economy has always been challenging. This time around is even more so because the usual burden of a bad economy may be compounded by the emotional disruptions of the pandemic. This means that leaders must turn the pages of the standard crisis playbook with care and moderation.

Leaders cannot stand still in the face of an economic downturn, but their bias for action and their instinctive responses — moving closer, moving faster, and increasing workload — must be harnessed. If these natural and legitimate leadership moves are not made in a balanced way, leaders may actually amplify the crisis.