Bad news said better

MS.COM By Yoly Villanueva-Ong
Monday, September 22, 2008

In the corporate world, the sad reality is that breaking bad news is par for the course. Donald Trump was not the first or the last to relish saying, “You’re fired!” In the reality show The Apprentice, contenders are eliminated as quickly and coldly as swatting flies. If this is art imitating life, all the more reason to ponder whether there is a gentler way to announce unpleasant information.

Surely there is a more humane way than Trump’s famous two words or how an ad agency CEO in New York supposedly got sacked after a hostile takeover by an aggressive conglomerate. One week after he lost the fight fending against the incursion, the head honcho suddenly found one of his underlings, who apparently helped engineer the coup, occupying his corner office. He was transferred to a dark, dank, windowless room half the size of his original area, several stories below the executive floor. Then he was stripped of the final vestiges of rank: the keys to the private elevator and the executive washroom! He got the hint and eventually agreed to retire. Non-verbal communication can sometimes be even harsher.

There was a time in Pepsi-Cola’s history when CEOs and top management would come and go like MRT trains. Ejection was so rampant in the company that it became a badge of honor among the Pepsi ex-men. The joke was that one wouldn’t succeed in his profession unless he’d been fired from Pepsi! And in fact, most of the executives who were let go for one reason or another ended up being hired in far more lucrative positions in other companies. Of course, not all survive reversals of fortune with aplomb. In fact, some pay the ultimate price, preferring to take their own lives rather than face the aftermath of a cataclysm.

The pink slip is not the only dislocation a career professional can experience. Downsizing or rightsizing; last in, first out; redundancy from mergers; demotion; dissolution of a position or a department due to obsolescence are some other instances. Milder but nonetheless stressful are a poor performance evaluation, major changes like an organizational restructure, a change of bosses or owners, privatization, corporate relocation and forced expatriation.

Then there was the curious case of a major stockholder and partner of a global food and beverage company suddenly selling out because he was unable to run the business. Apparently, he got arrested for his involvement in a pyramid scheme and was serving a 15-year sentence for fraud. To compensate the investors, he had to make amends by selling his other assets. Suddenly, his global partners had a new major stockholder on their board. Thankfully, this does not happen too often.

Shakespeare said, “Though it be honest, it is never good to bring bad news.” Some may remember this dark-humored joke about Lisa and Sheila, two co-eds sharing a room in a boarding house. A courier knocked on their door and said he had a message for each of them. The first was for Lisa. It was a singing telegram from her suitor. He then sang a romantic, soulful ballad that professed undying love and longing for her sweet yes. Lisa blushed, flattered and flustered, while Sheila impatiently waited her turn. The messenger then handed her a brown envelope that was apparently sent by her aunt. But not to be outdone by Lisa, Sheila insisted that the contents be sung to her immediately. The man was hesitant, but Sheila was adamant. He finally gave in and belted out, to the tune of Michael Jackson’s Thriller, “Ay, naku Sheila! Sorry ha! Nasunog bahay niyo! Wala na ang Lola mo!” (Oh, no, Sheila! So sorry! Your house burned down and your granny passed away!)

One might argue that bad news is bad news in whatever language or ditty. But there is a well-documented case study in the Harvard Business School that compared how two companies cascaded the news that they were closing down due to poor performance to their employees and stakeholders. This was a lesson not only in negotiation skills and conflict management but in internal communications, and ultimately, genuine concern for the staff.

Company A and Company B were both losing money year after year. Their stock value had also continuously plummeted. Both employed thousands of employees. The management and board instructed their respective CEOs to prepare the shutdown as judiciously and swiftly as possible, as the companies were bleeding away every day.

CEO A crafted what he considered a well-written memo explaining the company’s quandary to the staff. He gave a 90-day notice, announced and distributed severance pay in accordance with the law, and closed down the company within the three-month timetable that he prescribed. His board was impressed with his expedient handling.

CEO B, on the other hand, decided to take a slower route to prepare for the shutdown. He met with his department heads individually and shared all the vital information about the state of the business. He asked each one what they thought ought to be done. Then he called them all for an offsite gathering so they could vent freely, and asked them for their conclusions. The group agreed that there was no other option but to close shop. The unit managers then gathered their departments to share the information. An exit plan was implemented, complete with training modules and financial advice for what employees could do to stretch their severance pay till the next job. Company B also got in touch with headhunters and gave references for their best talents. The entire process took six months, double the time CEO A took.

In the month following Company A’s end of operations, there was a class suit against the board and top management, a US Department of Labor inquiry and a group protest by several sympathetic labor unions. Media covered all these developments in major publications and TV networks. Every past decision and action of CEO A was put under scrutiny and sensational coverage. Even when he was eventually exonerated from any anomalous transactions, he could not recover from the antagonism and resentment. He had lost too much social capital. This was one case where the bearer of bad news indeed got shot.

CEO B, on the other hand, did not win brownie points from his board for taking a longer time toward the end. But it was time well spent, because the employees understood the situation and appreciated all the efforts the company took to make the bad news more bearable. The staff even offered to be on call should CEO B ever need their services again. In due course, CEO B was able to negotiate a rehabilitation plan. He eventually turned Company B around with the help of most of his former team.

Although bad news is bad news, when mixed with a dose of real sympathy and communication know-how, it becomes easier to swallow.