It's hard to be a business owner with people counting on you when you have worries of your own and aren't sure what is appropriate to share. As an employee, it is also hard to be in the dark when it comes to your employer's plans and wonder if layoffs are looming or your job is changing.
Good communication, while sounding like motherhood and apple pie, is the key. Here are 5 tips for how to communicate with your employees when your business is going through difficult times:
Tip #1: Don't treat your employees like mushrooms, by keeping them in the dark -- talk to them.
In the absence of information, employees will make up their own. I guarantee it.
In small businesses, especially, employees are much closer to what's going on in the business. They will know if sales are slowing because they are dealing with orders each day. There are fewer departments and layers of management to obscure the company's real condition. They also read the same newspapers, watch the same TV news, perhaps follow the same industry trade publications as you, the owner, do. So don't think no news will be interpreted as good news.
It's a fine line to know when is the right time to discuss the company's finances with employees. You don't want to alarm anyone unnecessarily but you also don't want them jumping to the wrong conclusions because they aren't getting information from you.
If you are tracking your numbers closely and regularly, you will know when you're trending downward and have to take action. Especially in startups,things can go south rapidly -- literally in a few weeks' time. So don't wait too long. Remember, your employees are adults, not children, and can handle some bad news.
Bring everyone in, sit them down and lay out a few key points about the company's situation. Don't dwell on bad news and forget the good news -- give a balanced viewpoint. Conveying good news during tough times is actually more important than conveying negative stuff.
Have a plan of action that you are taking to address the situation. You don't have to have all the answers (see next point below) but you should also not give the impression that you're clueless either. Leadership is crucial during tough times. Leading means you need to be out in front.
Tip #2: Allow for back and forth communication.
When I was head of HR (one of my many roles) back in the day, and counseling managers on how to deliver bad news, I suggested speaking as if you are telling a family member about bad news. Your humanity -- empathy -- comes through.
Plus, what happens when you talk with family? They ask questions. And you try to answer them. It becomes a back and forth discussion.
Business -- and financial results -- unfold each day. We live through profit and losses -- and recessionary economies -- real-time. That means you probably won't have answers for every question, because you can't know what will happen in the next 3 months or 6 months or a year. It's also important not to make promises you can't keep (like: I guarantee no one will be laid off).
But letting employees talk and ask questions will make them feel better. They will feel part of the decision process. They will know you are listening. Just hearing their questions will tell you a lot about what your people are thinking. You may, in fact, be able to quickly dispel false rumors (like: I heard you're shutting down the company next week) and reassure them. And you can come back and give updates that try to address their concerns in subsequent meetings.
Tip #3: Convey confidence.
If you are in a panic, that will be magnified in your employees 10 times over. One of the toughest things is to convey bad news and admit you don't have all the answers, but still reassure employees that the problems are being dealt with. If you come across like the sky is falling, employees sense that and will magnify those feelings of doom and start heading for the door.
The best way to deal with your own emotions is to know what you plan to say in advance. Practice it if necessary. Take a deep breath and put your game face on before you meet with your people. You'll feel calmer and more confident -- and you will convey that. Your behavior goes a long way to how you feel, and how you feel goes a long way toward how your people will feel.
Tip #4: Encourage your people to share ideas and solutions.
In one of my past lives, the company I was with started going through some tough times during a recession. They announced what came to be known as the Coffee Decision (with a capital C and a capital D). They eliminated free coffee in the staff break rooms. Now, I don't know how much money they saved by that change, but given the magnitude of all their other losses at the time, it had to be a drop in the bucket.
Yet, to employees, that one move -- charging for coffee -- spoke volumes. We assumed the company was in dire straights. Everybody was talking: "if they have to cut out the free coffee, the company must be going down the tubes...." Every time we paid for the watery coffee that came out of the vending machines that replaced the coffee makers, we would grumble about all the other ways we thought they could have saved money aside from coffee.
Of course, we never shared our cost-cutting ideas with anyone in senior management, because we felt somehow punished by the "Coffee Decision." I'm quite sure the company incurred more losses from lost productivity as employees speculated (mostly incorrectly) on how bad things must be, than the coffee itself cost. Meanwhile, the real cost savings (like eliminating overuse of overnight delivery services) were overlooked.
There are several morals to this story, among them this: Involve your people in coming up with solutions to cut costs or increase sales. Ask them if they have ideas, to share them and that you will consider each idea. They may be closer to things and have more creative ideas than you do. Plus, they will feel like they are taking action, instead of feeling helpless.
Tip #5: Be a good fiscal role model yourself.
Another war story from my corporate days: I remember walking to a senior staff meeting and following the CEO and another senior executive down the hallway. The CEO was complaining about how he was disappointed by first class service on a certain airline. Then he stepped in the room and began to talk about the need to cut expenses, and how we managers would each have to cut staff by 5%. This is a man who had a car and driver pick him up and drop him off very visibly by the company front door (cars and drivers may be common in big cities, but in smaller towns and places like the Midwest they are out of sync with community values). Do you think he had much credibility?
Double standards destroy your credibility. When you share bad news and try to reassure people, they're likely not to believe you unless they feel you have skin in the game. If you ask people to take pay cuts or add duties or cut back on benefits, start with yourself.
Let me close with this: I don't have all the answers for how to communicate bad news to employees, because each situation is different. But I do know that without your employees your company is nothing. So try to put yourself in their shoes. Be the leader you would want to have during tough times.