These are tough economic times. As a business leader, you may feel engaged in a nearly impossible balancing act. Inflows and outflows. Customers and suppliers. Board members and employees. Nothing lines up!

Information Is Control

Although these are difficult economic times for many businesses, it is even worse for the workforce. Why? Because whatever decisions your business makes, you’ll have a central role. And this will make you feel in control—in the good times, like the successful captain of your ship—as well as in bad times, because you have the power and opportunity to make things right.

Why do you feel this way? You have information, lots of information. And this is key. It guides your thinking and actions.

Being informed makes you feel you are in the game. Unfortunately, employees are often ill informed and as a result, rarely have a sense of control. This only makes matters worse.

Managing Sensitive Issues

Corporate executives are called upon to be the bearer of news. Sometimes it’s good news, like communicating pay raises or company parties. And sometimes it’s bad news—which is more typical during these economically challenging times.

In fact, you may have to inform your employees of no raises this year, a 10 percent increase in healthcare costs or the need to begin furloughs—unpaid furloughs that result in lost income for employees.

In many cases, executives take too long to communicate bad news because they don’t want to hurt their employees. So they stall, hoping a little bit more time will soften the blow. But it doesn’t.

On the other hand, many executives do this to avoid their own pain—pain they’ll feel when they see the disappointment in their employees’ eyes and hear the disappointment in their voices.

Too often executives need to realize one fundamental thing: in tough times people don’t want to be taken care of—they know this isn’t possible. Instead, they want to be kept in the loop.

No Sugar Coating Please

Since the layoffs of the late 1980’s, the American workforce has become very familiar with the new employee-employer relationship. This was not always the case. Years ago, companies took a nearly parental role, caring for the hardworking employee from “womb to tomb,” as the saying went.

Since the late 1980’s, the American workforce has adjusted to its new relationship with management, which has shifted to a more mature relationship of peers.

As peers with an equal buy-in to the company’s success, there needs to be one absolute that serves both management and employees: the full and open sharing of information.

No sugar coating. No smoke and mirrors. Required is information that tells it like it is.

The American workforce has come of age. It doesn’t need or want bedtime stories. Rather, the workforce is ready and willing to hear bad news so it can begin to plan and chart its next career course. “Information ownership” gives employees the ability to take control of their lives—the same kind of control you value.

How Much Information Should Be Shared?

Information sharing needs to be carefully planned. For example, years ago I was contacted by an HR manager who stated up front that her institution was coming to an end. She said it was too late for consultants, advisors or last minute Herculean efforts. Instead, she wanted to know only one thing: how to manage her workforce during this most difficult time.

My response was to the point: communicate with your people, I said. And do it a lot in a variety of ways.

The reason for my approach is premised on a basic psychological fact: people thrive on information and hate uncertainty. If you give employees information straight from the hip and deliver it with compassion and respect, you won’t go wrong.

Still, people will be upset, and some might even cry. Depending on the news, wouldn’t you?

Executives need the courage to stand in the face of employee sadness, understand the pain and demonstrate an understanding of what employees are going through. This is good old fashioned empathy.

How do you communicate bad news? Use daily company huddles. Talk during staff meetings. And remember: the president or CEO needs to get in front of the workforce during these smaller team meetings, as well as in company-wide meetings. To help, make the company newsletter into a real news organ.

Importantly, make sure you get the news out to employees as it occurs. Senior managers will surely have more credibility if they make communication a priority during difficult times.

Not All Communication Is Good

If you need to broach sensitive subjects with your workforce, you first need to be honest with yourself and acknowledge how emotionally difficult this also is for you.

Should you share your doubts or your darkest fears with your staff? Whether you attempt a corporate turnaround or anticipate a total shutdown, you need to equip employees with the fortitude for both trips.

A great rule of thumb is to ask yourself two questions: is this the way I would like to get bad news? And, what am I trying to accomplish by sharing this information? Your answers will guide your actions.

Employees Provide Great Solutions

Your workforce represents the majority of your company’s intellectual capital. When you shield them from important facts, they won’t be able to fully and competently participate in the solutions. And, it is conceivable that they will see things you don’t that could result in a turnaround, or at least get the company on the right path.

When a company is in trouble, it needs to have all hands on deck. And when people are kept in the loop, they feel part of the enterprise. They recall they used to be on a winning team and usually continue to feel loyalty.

If you get people involved, they will feel empowered and invited to contribute their efforts and ideas. And very importantly, they will feel valued.

When employees are left out of the process in order to “soften the blow,” they feel progressively disengaged and often come to believe what they are thinking doesn’t matter because nobody has asked what they think should be done. When people don’t feel valued they typically pull back.

Essential Points to Remember

  1. Tough economic times are hard on everybody. People don’t want to be taken care of—they want to be treated as adults.
  2. Sensitive issues are more manageable for employees when they have the information to understand what’s going on, and the opportunity to do something proactive— like assist the company to improve or even leave for another job.
  3. Treat people as your partners in the business—in bad times as well as the good ones.
  4. As you involve and support employees, they’ll do the same for you—it’s human nature. It doesn’t have to be lonely at the top.
Dr. Jim Kestenbaum, a corporate psychologist, is founder of The Solutions Group ( This article appeared in Impact Analysis, September-October 2008.

Jim Kestenbaum
About The Author Jim Kestenbaum
James Kestenbaum, Ph.D., a corporate psychologist, is founder of The Solutions Group.

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