How to Deliver Bad News to Employees

by Sheryl Nance-Nash

2 min read

Nobody wants to be the bearer of bad news, but sometimes you have to do what you have to do. Let’s face it, times are less than stellar for many entrepreneurs: August was the fourth consecutive month of negative job growth for small businesses, according to the National Federation of Independent Business.

Should a crisis befall your company, you’ll want to be prepared to handle it. Making mistakes can be costly, from damaging morale to enabling lawsuits. So, think now — not later — about how you might tell your employees about cutbacks or layoffs.

Here are four tips for delivering bad news to employees.

1. Don’t delay the inevitable. “Unlike fine wine, bad news does not get better with time. In fact, delaying the sharing of bad news can cause a sort of tornado-like rumor mill as employees guess, most times incorrectly, at what is truly going on and what is going to happen,” says Jennifer Kluge, president and CEO, Michigan Business & Professional Association. “When there is bad news to deliver, it’s best just to rip off the Band-Aid.”

Steve Moore, director of human resource operations at human resources and business solutions provider Insperity, agrees. “When rumors disseminate throughout the company, this can lead to mistrust and cause unnecessary panic, especially in small-business settings.”

2. Talk, talk, talk. Nothing beats clear, direct, and honest communication. Explain the problem, outline the short- and long-term solutions, and most importantly, relay the effect on employees and the company. Ask and answer questions. Seek feedback. “Keep repeating this communication cycle through the crisis,” Kluge says.

3. Lessen the blow. You can’t eliminate employee stress, particularly when you have to let people go, but you can try to alleviate it. “Be sort of a Good Samaritan. Assist with job referrals, recommendations on LinkedIn, or introductions to other companies,” Kluge advises. “Helping them through the difficult transition will not only make your company stronger by helping the employees affected, [but] also positively affect those employees who will be staying on.”

You could prepare personal references on company letterhead that you distribute during your individual dismissal meetings with employees, says Kirk Johnson, owner and managing director of Kirk Johnson Executive Search, a member of the Sanford Rose Associates network.

4. Avoid critical missteps. Don’t have someone else — such as a consultant — do your dirty work, such as telling your employees to expect layoffs.

Be humane but not sentimental. “You don’t want to send an email. RadioShack and others have been criticized in the past for being cold, impersonal, and non-professional for sending email to notify employees that their position has been eliminated,” Johnson notes. You also don’t want to deliver bad news over the telephone; face-to-face is best.

Be prepared for the meeting. “Outline in your head, or even rehearse, what you want to say and the order in which you want to say it. Have all the facts ready, like the date of termination, the severance package,” says Marvin Brown, author of How to Meet and Talk to Anyone, Anywhere, Anytime: Simple Strategies for Great Conversations.

Share employees’ pain. If you’re saying you have to cut back because your company is having financial challenges, “make visible sacrifices to show solidarity with the employees,” Johnson suggests. “Reductions or pullbacks in company perks at the highest levels will demonstrate to all employees the gravity of the situation.”

Although there is no one-size-fits-all approach to delivering bad news to employees, empathy and compassion can go a long way.

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