How to Communicate with Employees When Times Are Tough

It’s easy to tell employees the good news: Profits are up, we landed a big new client, business is thriving. But how much, and how, should you tell them when the picture is not so rosy?

Employees are smart. They are tuned into their companies and know when business isn’t good. They’ll wonder what you’re hiding and talk amongst themselves. Hiding bad news from employees doesn’t build the kind of trust and empowerment businesses need to thrive. It makes talk about open communication sound empty.

If you have been communicating the good news, the last thing you should do is clam up when times are bad. Uncertainty makes employees nervous and causes morale problems, which can result in them looking elsewhere for jobs. The trick to communicating bad news to employees is to be candid without being alarmist.

Communicate bad news to managers before others so they are prepared to answer their staff’s questions. Managers are the most important conduit to employees, so they need to be fully informed.

Once managers know what’s happening, eliminate hierarchical barriers to communication. Tell them you plan to invite all employees into an open meeting to discuss the news. Answer questions honestly. And if you can’t answer a question, because it is confidential or you simply don’t know the answer, tell them that. It will build their confidence in your leadership. They don’t expect the boss to know all the answers, but they do expect confidence and openness.

When communicating bad news, don’t lie, sugar coat, use euphemisms, or otherwise mislead employees. If you tell them there won’t be layoffs, and then two weeks later you issue pink slips to half the staff, your leadership will be questioned and the remaining employees will lose confidence in the company. If you don’t know whether there will be layoffs, say so.

Present both sides of the story. There is often a good element to bad news in business. For example, reorganizing will help the company focus on its core business.

Invite suggestions. Your employees are often the closest to your customers. Perhaps they know something about the company’s problems that you don’t. Clearly state the problem: The market is contracting, sales are slow, business is down. Ask each employee to brainstorm ideas to help the company. They’ll feel less helpless.

Clearly explain any reorganization or actions that may take place, including the “why” behind the actions. If you plan, for example, to consolidate a division, explain how this move fits into the overall company strategy and how it will help the company be more efficient or emerge from difficult times. If the action is temporary, give a clear timeline for the beginning and end.

Remember, employees hate uncertainty. Honest communication with everyone can help deter rumor mongering, gossip, and poor performance.

Emily Esterson is a contract writer, editor, and publisher specializing in small business topics.