Chapter 7: Deliver Bad News, and Do It Well

Overview

It’s no use saying “We are doing our best.” You have got to succeed in doing what is necessary.

—Winston Churchill

When Hyperion Solutions, a $500 million performance management software company, faced a merger gone sour and a slowing economy, the chief executive officer (CEO) hired Amelia Tess Thornton to help pull the company through. As chief administrative officer (CAO), Tess Thornton was asked to help take $69 million off the bottom line and find a way for the Sunnyvale, California–based company to remain profitable at a time when most software companies were not. When it became clear that 10 percent of the publicly held company’s 2500 employees would have to go, Tess Thornton immediately turned to the challenge of how best to handle the layoffs.

“There was tremendous pressure to keep things quiet,” she recalled. “Layoffs were happening all over the [Silicon] Valley, and the common approach seemed to be to terminate employees on a Friday afternoon so you could ship them out as quietly as possible and hope that the employees who remained would somehow forget about the losses by Monday.”

Hyperion chose a different route. First, it announced almost eight weeks in advance to its employees that layoffs were imminent. Even though specific information—which positions or departments would be affected—was not yet known or could not yet be divulged because of Securities and Exchange Commission requirements, Hyperion leaders tried to be as open as possible. “It was extremely difficult,” Tess Thornton told me. “People were afraid at first.”

By being candid from the beginning, Hyperion was able to get valuable input from second- and third-level managers, who were asked to participate in the process of determining where the cuts would occur. The managers also were given training in how to handle employees during difficult times and how to deliver bad news, because it would be they—not the head of human resources (HR) or other senior management—who eventually would inform individual subordinates that they had been laid off. “Employees want to hear that kind of news directly from their supervisor,” Tess Thornton said. “Plus we wanted to give the people who were remaining a chance to show respect to those who were leaving and, in a way, be able to grieve the loss.” Up to the actual layoffs, Hyperion tried to quell rumors by allowing employees to ask any question and setting up a blind mailbox on the employee Web site for those who felt more comfortable asking questions anonymously.

Also, instead of the touted strategy of choosing Friday afternoon as the time to communicate the bad news, Hyperion leaders chose Tuesday morning. “While Friday certainly would have been easier for us, it would have been the worst thing for those remaining because they would have been left to worry all weekend,” Tess Thornton said. “By choosing Tuesday, we had the whole week to talk with employees, meet with them, and correct any misperceptions. Consequently, by the weekend, people felt better.”

While the managers who personally handled the layoffs felt the weight of such a difficult task, several later described the event as one of the proudest moments in their careers. According to Tess Thornton, “They told me they believed they honored the people who left, that they had been given enough information and felt prepared to deliver the message.”

By focusing on communicating tough information in ways that showed respect, integrity, and care, instead of taking shortcuts for expediency’s sake, Hyperion ultimately benefited through increased, long-lasting morale. Said Tess Thornton, “It totally changed the trust level that the employees had in senior management.”

Delivering bad news can be tricky business, yet doing it well is an essential part of leadership transparency that builds credibility and is a leader’s opportunity to visibly demonstrate his or her commitment to honesty. We all have been on the receiving end of bad news, and we know how it feels. When it is not delivered well, we can feel a sense of betrayal, anger, and indignation. Trust is destroyed, and relationships suffer.

For most people, delivering bad news is hard. Some leaders opt for silence, and whether their intentions are good or not, that is probably irresponsible. Those on the receiving end usually appreciate bad news that is delivered promptly with honesty, directness, care, and concern.