If The Godfather taught us anything about business, it was this: It's personal. So when the news is bad--and for risk-chasing entrepreneurs, at some point it will be--a good communication strategy will save you the drama of becoming the enemy.
Take it from Dr. Robert Buckman, a medical oncologist and professor at the University of Toronto who's been breaking bad news professionally for decades. "Do it poorly," he says, "and people will never forgive you. Do it well, and they'll never forget you."
Buckman developed a protocol called SPIKES to teach physicians, along with businesspeople from the likes of IBM, Pepsi and PricewaterhouseCoopers, a better way to communicate bad news. Study up so no one gets (too) hurt.
Setting: Have the exchange in person. Sit less than four feet away, keep your eyes on the same level and show interest by leaning forward. If it has to be done by phone or video, acknowledge that the medium is lame. Avoid text or e-mail unless you're trying to be a bosshole.
Perception: Find out what people already know or suspect; it'll ease them into the situation. If you're about to lay someone off, you might ask, "How do you think things are going?"
Invitation: Prepare them for what's coming. Say you'd like to talk about the situation so they know you're about to talk about "something big."
Knowledge: Your delivery should be straightforward and chronological. ("The economy is bad and the budget is down, so we have to cut staff.") Never use jargon.
Empathy: Acknowledge the person's emotions appropriately. Be attentive and supportive, but don't say "I know how you feel," because you don't. Buckman suggests something more along the lines of: "This is a terrible shock to you" or even "This feels awful to both of us."
Summary: Don't end the conversation until you've addressed their emotions and talked about the next steps.