From the March 2001 issue of Entrepreneur

You've got a problem. It might be that you've just lost a big client, or there's a major production breakdown, or a key staffer is leaving-whatever it is, it's big, and you need to break the news to your employees. How can you do it without demoralizing them and further hurting the company? Most important, don't put it off, says T.O. Collier, president of Nimblewill Creek Consulting Inc., a human resources practices consulting firm in Dahlonega, Georgia. There's nothing to be gained and much to be lost by waiting. "Rumors get out," Collier says. "If you don't tell your people, they're going to find out anyway or they're going to make up half-truths."

If your company is small enough, make your announcement in person; if that's not practical, have managers gather employees together and share the information. People need the opportunity to react and ask questions, and they can't do that when they just receive a memo.

When making your announcement, tell employees what you know and be honest about what you don't know. "Lay it out as best you can," Collier says. "Say 'here's what has happened, here's what we know, here's how we think it will affect us.' Then open it up to questions." If answering a question would reveal confidential information you're not ready to release or perhaps that you can't release because of legal issues, be honest. "You can't always tell everything, but as you can, keep people informed."

When the bad news includes the probability of job losses, give as much notice as possible. If you can afford it, offer retention incentives to encourage people to stay with you as long as you need them, rather than jumping ship at the first opportunity. "You may lose some people, but most will stay with you and see what's going to happen," says Collier. "What you don't want is everybody walking out the door at once."

While things are being resolved, hold regular informational meetings and also talk to everyone informally. Make sure people are asking questions and getting answers.


Jacquelyn Lynn left the corporate world more than 14 years ago and has been writing about business and management from her home office in Winter Park, Florida, ever since.


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