Delivering Bad News

Everyone was on the video chat, and a leadership team member had just finished delivering the PVTV.

“Before we get into the numbers, I wanted to share some unfortunate news,” I said. I had decided it would be best to just jump right into it. “We found out yesterday that RedBrick is reducing the amount of work we’re doing with them by half. Of course, that means we’ll also earn half of the amount we were expecting with them.”

It was weird to deliver this news over video conference, but the format allowed me to see people’s faces clearly. Some were stoic. Others were unable to hide their shock and dismay. A couple of people turned off their cameras. I made a mental note to follow up with them to make sure they were okay.

“Because of the impact that this change will have on our numbers, we will have to implement the second scenario we told you was a possibility. Right now, that means we are not doing layoffs but everyone will take a twenty percent pay cut. It’s effective immediately.”

I let the news sink in for a minute, then continued. “Obviously, this was not something we wanted to have to do. We’re going to answer as many of your questions as we can now. After finishing the Huddle, if you would like to speak with me or anyone else on the leadership team, please reach out. We want to help everyone through this the best way we can.”

I then opened it up for questions. The leadership team had prepared for what we thought people would ask, and it’s a good thing we had. We got the tough one right out of the gate.

“When our numbers come back, will we be paid more salary until we catch back up from the salary we missed?”

“I’ll take this one,” Rachel said, answering before I could. “We talked about this at length on the leadership team. We will not be paying people more down the road to make up for what we cut during this period.

“We have to remember that with this revenue loss, our expenses are higher than the money we are bringing in. We have to right-size our business accordingly. We’re doing everything we can to avoid laying off team members, so that means pay cuts. As soon as we can bring everyone back to full pay, we will.”

I was impressed that Rachel would take that hit, and her answer was spot on.

Someone else on the team asked, “But you said earlier that we have cash reserves in the bank as well as a line of credit. Shouldn’t we use all of that before we make any pay cuts or other changes?”

“That’s a great question,” I said. “We are definitely weighing when and how to use the cash reserves that we have when making these decisions. Keeping a certain amount of cash in the bank is necessary. It is the only way we maintain the ability to do things like pay severance if we should need to or to make payroll if a client needs to delay payment to us. And make no mistake, we are tapping into our cash reserve at the moment. We just have to be cautious as to how much we take out.”

There were several more questions, such as what numbers we’d need to hit to bring salaries back, and we were prepared to answer them. As always, we led with honesty, and I’ve always felt that was the best way to communicate with the team, letting the chips fall where they may.

“We are doing all we can, guys. And will continue to do that,” Rachel concluded. “As Will said, please reach out if you want advice or have specific concerns about your situation. We appreciate you all so much.”

Key point: When delivering hard news, push for straight, honest communication. Your team can handle more than you think, and they’re smart enough to realize what’s happening even if you try to hide it. Have the confidence to treat your team the way you’d want to be treated.

The meeting agenda shifted to Ahmet, who presented some promising opportunities in the business pipeline. Everyone was understandably a little quiet. I knew they needed time, and having this conversation virtually made it even tougher.

And, if I’m being honest, I was mostly hoping that we would be able to hang on and not enact Scenario Three. We didn’t want to have to lay people off. We were making huge efforts to avoid that step, but so much was out of our control. Time would tell.