Colin D Ellis
Leadership | Culture | Success
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Why Hiding Bad News is Bad For Culture

I remember my first secret project. Four months before Christmas it was announced for senior management ears only that we were likely to overspend our budget and, consequently, we had some ‘hard decisions to make, cost-wise’. We were given a target and asked to look at our staffing numbers and likely costs for the rest of the financial year and make recommendations for savings.

I was aware that this kind of thing went on – how else were redundancies decided? – but this was the first time that I’d been involved in such activity. I felt uneasy with the secrecy of it all because, firstly, we were dealing with the lives of other humans and, secondly, past experience had taught me that others found it hard to ‘keep mum’ and as a result the news would inevitably leak.

Which it did.

News spread like wildfire and caused anxiety, stress and anger. Productivity went down – secrecy was maintained – and when the announcements came, Christmases and lives (in the short-term at least) were ruined.

I reflected on my role in this as a fledgeling manager and resolved to handle things differently the next time it happened. And, whether we like it or not, this kind of activity will always happen.

Consistently reviewing the cost base is a natural function of business and, from time-to-time, it’s necessary to reduce headcount in order to meet the needs of stakeholders or public service budget cuts.

Of course, there are many things that organisations can stop doing to avoid this situation in the first place. Things such as:

  • Being more ethical and reducing wasteful activity

  • Not doing more projects or work than you have people for

  • Killing some of the projects that don’t add measurable value

  • Getting the promised value from projects once they’ve been implemented

  • Staying on top of market trends

  • Managing risk.

Note that I didn’t say ‘cut out personal development budgets for staff’ and yet, this is one of the very first things to go when money is tight, despite its impact on productivity, employee engagement and succession planning.

 

Of course, we’ve also seen cases of bad news being released at opportune times, in order to ‘bury’ its impact or to conceal its intent. There are a number of high-profile examples of this.

After hours on Friday, April 29, 1994, computing company Commodore declared bankruptcy, keeping even its most senior executives in the dark. They found out via the news or press releases pinned to office doors.

On September 11, 2001, whilst the world was watching a terrible tragedy unfold at World Trade Plaza in New York, Jo Moore, who worked as an advisor to UK Minister Stephen Byers, the then Transport, Local Government and Regions Secretary, sent an email saying ‘Now is a very good day to get out anything we want to bury. Councillors expenses?’.  The email was leaked to the press and Moore was swiftly sacked. 

Still in the UK, back in December 2006, Tony Blair became the first sitting Prime Minister to be interviewed by police as part of a criminal inquiry. He chose to do so on the day that the report into Princess Diana’s death was released and was widely criticised as a result.

Regardless of the motivation for bad news, it should always be delivered openly, honestly and quickly. This is something that those in the medical profession and emergency services are taught as part of their induction into public service.

In a paper called Communicating Bad News by Miranda and Brody, the authors state that ‘The physician's goal… is to fully inform the patient and family so that they are able to comprehend the clinical situation and make sound decisions consistent with their beliefs and ideals’.

It’s no different in the business world.

In order to preserve the culture of the organisation and the trust of its employees (general public and shareholders), senior managers have a responsibility to be honest about their position and to outline the work required in order to ensure that the future of the company is secure.

Sugar coating the news, giving the activity an abstract name (‘Project Refocus’) or being liberal with the truth creates fear and distrust.

This is something that former Netflix executive Patty McCord talks about in her book, Powerful: Building a Culture of Freedom and Responsibility. She said, “We didn’t want anyone, at any level, keeping vital insights and concerns to themselves. The executive team modelled this: We made ourselves accessible, and we encouraged questions. We engaged in open, intense debate and made sure all of our managers knew we wanted them to do the same.”

Jason Fried, in his book Rework, also said, ‘'People will respect you more if you are open, honest, public and responsive during a crisis. Don't hide behind spin or try to keep your bad news on a down low.”

Organisations whose leaders limit impending bad news to a few people and who encourage a culture of secrecy and selective confidentiality are not to be trusted. They have made the decision to treat their fellow humans in a way that is disrespectful and that, once released, will erode confidence and trust in their ability to lead the organisation to a more successful future.

Conversely, organisations that communicate early, that are honest about their position and what it might mean, who take the time to clearly articulate the process and involve others in it and who treat staff with empathy and understanding increase engagement, trust and confidence (by as much as 12% according to one survey).

Any kind of news that affects the livelihood of staff is never easy to deliver, but senior managers can make it a lot easier to bear and protect the culture of the organisation, if they’re honest from the start.