Everyone knew that the company was in trouble. The signs were all there. But company president John Green played his cards close to his vest and refused to talk with employees about the company’s financial challenges. He was afraid that by divulging bad news, he would cause a mass exodus.As a result of the lack of communication, the rumor mill ran rampant. Bits of information were passed from department to department, and a surprisingly accurate picture emerged: There were going to be layoffs.
The employees felt that they had been treated unfairly and shown a lack of respect, and in turn, they showed a lack of respect for the president andLessons learned team. Production suffered, absences increased, morale took a nosedive, and there were four cases of insubordination in a week.
The lesson here is that withholding important information—even if it is bad news—is a misguided strategy. “Employees are very adept at connecting the dots, so it’s always good policy to be transparent in your dealings with them. Keep your workforce posted on developments, and treat them like adults,” says consultant Quint Studer, author of Straight AKeeping employees informed about the financial status of your company can be powerful in changing their behavior during tough times. If people understand the real costs of doing business and the rationale behind decisions, the outcome may surprise you. The employees, rather than rebelling, will often pull together and help the business get out of a rough patch. .
“In a transparent company, there’s no reason to hide financial realities from anyone. Anticipating tough questions, formulating the right keywords, and sharing information at all levels allows everyone to work through challenges effectively,” Studer says. “It also allows them to celebrate good news when the financial outlook is bright.”