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How to Deliver Bad Business News

No organization or industry is immune to delivering bad news at some point in time. It could be a failed business strategy, a lost customer, a flopping product or a major employee mistake, there will be bumps in the road that require leaders to deliver bad news to any number of stakeholders.

“Whether it’s a labor shortage, losing quality employees, meeting payroll or cash-flow situations, everyone has challenges,” says Lafayette-based business and management consultant Debbey Ryan. “Everything can be overcome, but it’s all in the way you handle it. A lot of times people are unwilling to face the truth and deal with it.”

One of the first steps in facing the reality of a difficult business situation is to clearly communicate what’s going on to important stakeholders — whether that’s customers, investors or your employees. Here’s how to break the bad news effectively.

Be Open and Direct

When delivering bad news, research shows that it helps to just deliver the bad news in a clear, direct and honest way so everyone can begin processing and reacting, hopefully in a constructive way.

A 2017 study by two professors at Brigham Young University and the University of South Alabama found that people value directness over an extended and overly polite lead-in.

For the study, 145 study participants received a range of bad-news scenarios, and with each scenario, they were given two potential deliveries. For each received message, they ranked how clear, considerate, direct, efficient, honest, specific and reasonable they perceived it to be. They also ranked which of those characteristics they valued most. Participants overwhelmingly valued clarity and directness over other characteristics.

Use a Human Approach

Even if you’re blunt and straightforward, remember you’re delivering bad news to actual people. Show some compassion, empathy and allow for some venting depending on the scenario.

Ryan says business leaders can be direct and to the point while also acting “very professionally and tenderly.” For example, she says, trying language such as, “We have some major issues and challenges here and some opportunities to make it better, so let’s talk about this,” rather than just pointing out what’s wrong and who’s to blame.

Focus On Why It Happened And How to Fix It

Some finger-pointing and angry reactions may be inevitable once bad news drops, but moving beyond those emotional reactions and focusing on the root cause and potential solutions for the negative situation is much more productive.

Even if you don’t completely solve the problem, an honest examination of what actually happened can help your company avoid making the same mistake in the future. “Let’s look at how we could have made the situation’s outcome better,” Ryan suggests. “Focus on what you could have done differently, and what you could do differently next time.”

In comments for the Forbes Business Development Council, Christian Valiulis, Chief Revenue Officer at Shreveport-based Automatic Payroll System, suggests giving the cause of the bad news before actually breaking it to your team.

Once the news is out, he says, they may not be able to focus on the cause. “That's not to say sugar coat anything, but you need to define the scope and magnitude of the situation, so the true impact will be felt,” he writes. “This way, a less emotionally charged and more productive conversation can happen to turn things around.”

Zoe Parker