Businesses love sharing news about their successes and positive business finances. Not only do they enjoy tooting their organizational horns, but they should share good news. It’s good business to tell customers, stakeholders and the public in general about the great things that are happening.
However, with a large number of businesses now in adverse financial situations, many owners are questioning whether sharing is such a good idea right now. They are asking:
— Should we tell our employees about our financial situation and, if so, what exactly should we tell them?
— How should we manage our Boards, banks and investors?
— What do we tell our vendors?
— When and how do we tell them?
Before we get on the loud speaker, call in the troupes for a state of the union or even consider blasting an email, we need to consider one question very seriously: What do people really want to hear?
Regardless of whether or not our own actions are the cause of the company’s current unfavorable financial results, there are significant economic forces above and beyond our control. The question isn’t necessarily who’s at fault? The critical question on our stakeholders mind is this: What are you, Person In Charge, going to do about it?
The answer to this is what’s desperately needed right now: for owners and leadership to fess up to what is happening and clearly state what they’re going to do to change it.
Generally, in communicating adverse financial information, Bottom Line Growth Strategies advocates transparency to key constituents. We are not suggesting you should advertise to the world that you are currently losing money or, perhaps more aptly, having cash flow problems. What we are saying is that your stakeholders want to hear what you are doing to correct your company’s financial hardships and when that correction will occur. And how you send that message depends on which type of stakeholder you are talking to.
Following are the key stakeholder categories and a guide to communicating Not-So-Good Info to each:
Your Staff: We’ve listed your employees first because they are your lifeblood and, as crazy as it may seem, the same employees who have been with you during good times not only can but want to help you to improve the company’s financial situation. All you need to do is give them the opportunity by including them in the discussion. Employees rally around those leaders who allow them to feel part of the inner circle.
You don’t need to hand out printed financial reports; instead give an update on how the company did in the past year, how it is currently doing, current factors influencing the results and, ESPECIALLY, the actions you are taking to fix the situation. Avoid making promises you can’t keep. This includes telling your folks there will be no layoffs or salary/benefit cuts. Making this promise and then needing to break it destroys your credibility. Instead, take this opportunity to emphasis teamwork and how you will all “get through this together.”
Right before you is an opportunity to get feedback on areas of waste, cost savings or, even better, increasing revenue. If you don’t talk, endless speculation and back channel communication may result. If you do talk, that time may be spent brainstorming new solutions and ways of working with the current reality. Take advantage of your employee’s knowledge.
Your Board, Your Bank, Your Investors: When managing and working with a Board (or other vested parties), honesty is always a good policy. But again don’t over- or under-promise by creating overly optimistic or pessimistic projections. Prepare projections you believe your company has a good chance of achieving. Boards, investors and the like don’t want surprises, especially bad ones. They want to know that you have a handle on the issues and, again, what you are doing to fix the problem. Always be one step ahead by anticipating their questions and hot buttons. It’s likely many of your Board members and/or investors have been (or are currently in) your exact shoes and you will build super-solid credibility with them by being honest and open during this time.
Your Vendors: Every business has key strategic vendors that need to be included in the Not-So-Good Info communication loop specifically so that they can assist your company in getting through tough times. If you communicate appropriately with vendors during financial adversity, not only telling them what is going on, but also what you are doing about it, they may be more flexible and collaborative about payments and other issues than you would have imagined. You do not need to go into a great detail with this group – just give them the bottom line – most importantly, your action plan.
Employees, vendors, Board members and investors have one thing in common: They are PEOPLE. And, generally, people are more than willing to work with and support someone in difficult times if they believe that person is honest, credible and, most critically, has a plan.
Communicating in business is not so different from communicating with friends, family or any other group that is in some sense vested in you. Human qualities like compassion, teamwork, perseverance, commitment, empathy and even love, rise up to meet the business owner who has the guts to face tough times head on with honesty and with integrity.
Certainly, we want you to be strategic in your conversations, but when you are sitting at your desk pondering whether silence really isn’t golden, remember this: You, them, us – we really are in this together.