Communicating Bad News – Seven Steps for CEO's
Communicating or delivering negative or “bad” news is without question an art form. (I do disagree with the contention that delivering good news properly is not an art – it is)So how do you do it? What’s the secret formula?
While there is no secret formula, there are clear, concrete steps every business leader can take to ensure that communications are effective during down cycles and quarters.
1. Develop Relationships with Board Members and Investors BEFORE a crisis or bad news hits - seems like common sense but this often gets pushed to the side in favor of day to day responsibilities that yield immediate results. It is much easier to communicate bad news to someone who is used to hearing from you regularly than someone who hears from you once a quarter. There is a reason why some of the greatest political leaders of our time continue to make phone calls and write notes to key supporters during off years, long before election season is looming on the horizon. How can you do this?
2. Communicate more often - not only at monthly meetings, especially during tough economic times.. Yes, this is a bit counterintuitive as a CEO wants to spend as much time as possible “adding value,” however I would argue that keeping investors and Board members active, involved and included(rather than frustrated) adds as much value as anything else.
3a. Get in the habit of a regular schedule to communication – One technique that works well are weekly email “Updates from the CEO” which consist of a paragraph or two delivered once a week with the high and low points for the company for the week. Why? It reinforces the message of engagement with the Board and investors, by getting the Board in the habit of receiving regular correspondence outside of when they are “supposed” to get it. This is the “baby” step.
3b. Pick up the Phone – 3a would be a bicycle with training wheels, and 3b is the mountain bike. Call your investors and Board members weekly. They might be too busy to take the call. Call anyway. They may tell you not to call every week. Call anyway. Everything you do sends a message and reaching out on a very regular basis sends a very clear message to your board and your investors….
At the same time you are doing the above,
4. Communicate within the organization as well! – Be open. Be available. Talk to people. If you are a CEO, be seen. Nothing is worse than a CEO who stays behind closed doors. Your organization needs to not only know what is going on, but what it means (the message) — and an important point for CEO’s – what it means to you is very likely different than what it means to an employee.
5. Treat your top talent as you would your board and investors – If you think you have talked to them enough, go back and talk to them one more time. Trust me, if your top talent is nervous, and they are, and you are not communicating with them, they are looking elsewhere. As times get more challenging your top talent becomes more valuable. Replacing superstars in this environment is not easy.
6. Be Consistent – Nothing deflates an organization, a board, or an investor more than perceived inconsistency in communication or communication style. Everything you do as a CEO sends a message, and communications, or lack thereof, sends a clear message to a Board or investors (hint - not a positive one)
7. Be Open with Information- Trying to hide bad news a) is no longer possible and b) will absolutely destroy all credibility. In a 24/7 information cycle, the news will come out, and it is always better if an organization delivers it than if it is delivered by someone else.
Josh over at RedEye made an excellent point – “Sharing data with a board does not mean that you are sharing control. Rather, I believe that an informed and knowledgeable board will be less intrusive (and more hands-off) than a board that is in the dark.” Well said.
Matt
Thanks for the reference. I thought this was a great post on a subject that deserves a lot of attention, now more than ever.
A pro-active CEO and a Board/Investors who are willing to partner, will preserve long term value better than any business plan.
Great points, Matt. I would also add that when communicating bad news, it is best to come prepared with the solutiuon. This way the conversation can quickly move from bad news to discussion of a proactive resolution. Thanks for the post.
That is a great point Rachel – thank you for contributing!
Great post. I guess it;s also effective to use the sandwich technique. The buns will serve as the positive side of the news and the patty will serve as the negative side of the news, just to keep it positive and not too negative. I also agree with Rachel that you just have to be prepared with a possible solution and be open with the suggestions of the members which may be better in the end.
Jen Hopkins
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