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Episode #035 – How Do I Tell My Employees The Business Is Currently Not Doing Well?

This week’s question comes from Clifford, who asks, “My small custom manufacturing company had a solid, but not a great year. Very optimistic projections for next year have us doing more or less the same next year, but our optimistic projections from last year led us to believe we would close out better than we did this year. I’m not preparing to shut down the business, but I don’t have a real gauge of how healthy the business really is. How do I tell my team about the troubles we are facing without setting off a panic?”

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When you know you have a potential problem but are unsure of just how bad the problem may be, the best course of action is to be totally honest with those who need to know and let the consequences of their actions dictate what you do going forward.

Let me be clear that total honesty is always the right way to go. I am not endorsing lies and schemes to manipulate a workforce or management team in any case. But there are plenty of cases where this tactic is employed successfully. Until the full truth eventually comes out. And it will always come out at the wrong point of a cover-up plan.

In your case, Clifford, it sounds like you have no real reason to fear the sudden loss of your client base, which is how work is generated for your crew and revenue is generated for the business. At the same time, you have no idea whether your current client base can sustain the business and give your current workers enough to do at their current salary ranges.

Businesses exist to make money. Money needed to at least to sustain themselves, and hopefully create wealth for all involved. Not having a great forecast of the future means you can’t prepare for it. You don’t know to expect an uptick in business that might mean adding workers, or a foreseen downturn that where you can adjust the workload to limit the distress to the workers you already have.

My advice is to tell your staff the bad news as it is. And the good news that you have is that it is not totally bad news, but greater expectations are not what you are expecting.

Start by telling your management staff and anyone who owns shares or equity in the business. Chances are they know the full details very well, but this is only partly for relaying information. This is initially a quick test run of what you intend to say to the rank and file. If you get any pushback from those who don’t know the full extent of the situation or get feedback from those who do know the full situation that the message you delivered didn’t come very, you can adjust.

You don’t want to have too much time between the test message and your full message to the troops. Why? Paranoia. Your people are smarter than you give them credit for, even if you give them a lot of credit. Your managers are less loyal than you can expect, even if you think of them as pure mercenaries. Between the time the problems start to become obvious to you and the moments you convey the true situation to a worker, they see signs of stress and only have their imaginations to fill in the details of the source.

I have stated many times if you don’t want me to know the true weight of a situation, give me little details, and my imagination will fill in the blanks to create the most amazing and preposterous story possible. And it will still be a story that is just plausible enough to be possibly true. Don’t underestimate the ability of your worker to do the same on their own, and actually reinforce the false narrative as they share the details of their wild theories with each other.

Try to make one mass address to the main staff. It will be easier to get the message out in one shot than to split the shifts, so do your best to make this happen. Take into consideration any feedback you got from talking to the managers and tell the story as clearly and cleanly as you can.

I said you have to let your workers’ decisions dictate what you do next because now they know what the company is up against, some of your workers will see this as a sign that they need to add some personal urgency to any new directions they may need to make to their lives and career.

What I expect you will find is that the bulk of your workforce will rally around you and the company, wanting more growth and success than you could imagine. Yes, some will see this as the perfect time to bail, but if you have been operating on the up and up for this long, the ones who really want to be there will go into overdrive to keep you and your company successful.

This Week’s Business Questions Asked Here: How Do You Deliver Bad News To Your Employees? (answer in the comments)

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