Leaders, with a few industry exceptions, have noticed that the economy is in trouble (duh), but they still seem to think that their people don’t know the facts (double duh).

Sadly, too many bosses, from Fortune 100 companies to mom and pop-owned small businesses, are clamping down, saying nothing, running scared, freezing, blustering, or some combination thereof.

The result is management by rumor, which once started never ends.

The way to deal with bad news is directly, openly and honestly.

Even when you have to lay off this axiom applies; in fact, it’s the only way that gives your company any chance of emerging with the rest of your workforce intact and productive.

Here are six basics to keep uppermost in your mind—Whether they are comfortable or not!

1. Bad news must be communicated—just like good news.
2. Employees aren’t dumb—they know something bad is happening—and if they’re not explicitly told what it is, rumors will make any difficulty a catastrophe and a catastrophe a death knell.
3. Management must be explicit about the ultimate potential consequences. In a situation that’s unfolding, such as the current economic crisis, when no one knows what’s ultimate or can predict when it will change, frequent updates are effective.
4. Everyone hates uncertainty, which is all you have to offer at present. Analyzing and then explaining the worst case outcome as well as what you’re doing to counter it and how your people can contribute goes a long way to stabilizing people and gaining their buy-in to your plans.
5. Successful plans are dependent on how well they are communicated, which is what determines employee buy-in; if you choose the delusional approach of minimizing the situation then you should expect minimal results.
6. Share the outcome of your thinking, whatever it is—layoffs, plant closures, project cancellations, etc. If you don’t trust your people with the information your problems are even more serious than you realize.

Any solution to a crisis must be seen as fair, reasonable, and businesslike. If management’s reaction is illogical, petty, slipshod, unrealistic, draconian or any combination of these, then it’s likely employees will conclude the ship is about to sink and leap off.

People understand that difficult situations demand difficult remedies, and they appreciate that management must at times step up to harsh challenges. But if solutions are irrationally or whimsically applied, they become a demoralizing factor, increasing the difficulties that people encounter in trying to do their jobs.

Finally, you should always attempt to find a positive note to leave with employees. Everyone already knows that things are bad; it’s your job to find a potentially favorable course of action.

Just remember, you hired your people for their brains, so don’t expect them to suddenly go dumb. Employees easily spot propaganda masquerading as a solution. Predicting an impossibly favorable outcome will not only demean management, it can also result in a lawsuit.

Image credit: sxc.hu

Today is the story of why it is better to ask than assume and how a so-called follower can lead. It all started with Denis’ post December 31 describing what was happening in his company.

“I do not trust the developers I work with to do the right thing,… I used to be able to trust people in the team to correct me and help me get better … Work is a lot less enjoyable when that trust is gone.”

Denis is a reader and we’ve gotten to know each other over the last year, so I asked what happened.

“Let me see management changed, over committed failed to motivate people. The more experienced and talented members of the team left which provided less structure and safe guards. Now as we know unmotivated people don’t give their best. They do just enough to satisfy their management.”

I asked for more details and our conversation moved to email over the next week and have Denis’ permission to share them.

Over the next week three were additional management changes and Denis didn’t sound hopeful about how things were likely to work out. There was a 9% company-wide staff reduction; Denis and three other people became the basis for a new team and its management was taken over by the group that was actually funding the project.

“My impression is that the manager who we report into now was forced to take our project by his business sponsors. The manager himself has a decent reputation though and is in the process of hiring someone to put between him and us.”

Regarding the culture,

“The company thinks of it has a consensus culture. In reality it is a company that works on loyalty networks and temporary alliances among peers.”

As you may have guessed, none of this was exactly a moral booster; in fact, you might call it management by rumor with the assumptions generally falling on the negative side.

Typically, when stuff like this is happening, people’s reaction is to hunker down and polish their resumes, but, in spite of his assumptions, Denis took a chance with a more direct approach that yielded extremely positive results.

“The meeting was triggered by an email I sent expressing interest in him explaining his vision and how we fit in it. I was requesting a one on one but he made the meeting for the whole team. He took 1h 45 minutes of his time to talk when 1h was planned. And he mentioned we will do a social event for the whole group so we get to meet everyone.

So far he is the most competent manager I have met in this company. My direct manager has not joined the group yet but I hear good things about him so there is hope.”

We’ll never know what would have happened if Denis hadn’t sent the email; if the manager is as good as he seems to be he probably would have done the same thing, but maybe not quite as soon and likely with much more damage.

There are at least three important lessons to be learned

• Management must become as competent at communicating bad news as it is at communicating good.

• Remember that the result of no communications is a rumor-ravaged workforce and that once started rumors never go away.

• There are better ways for workers to handle difficult situations than to hunker down or just sit and wait; they can take the initiative and ask for information; most managers will appreciate the request.

What else can be learned from this?

Your comments—priceless

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