Management Tools

By Paul Falcone Aug 1, 2003

HR Magazine, August 2003The Bearer of Bad News

Use these tools to deliver bad news up the line and up to you.

Hollywood lore echoes a true story of the fear of delivering bad news: In 1939, subordinates to Adolph Zukor, Paramount Pictures’ founder, were terrified of telling their studio boss of the box office success of rival MGM’s “Gone With the Wind” for fear of his suffering a heart attack.

Maybe that seems a bit exaggerated in today’s world of recent corporate scandals and bankruptcies, but it makes an important point nonetheless: We all walk the delicate line of balancing the delivery of bad news with the fear of being blamed for holding it back.

Giving and receiving bad news is a common part of business. However, focusing on how to deliver bad news to senior management as well as ensuring that your subordinates are keeping you abreast of unpleasant changes in circumstances are critical in this information-driven work environment. A simple rule to share with your employees is this: “I don’t mind that bad news occasionally hits the fan; I simply want to know which way to duck when it does. You’re responsible for communicating any problems with me before I learn about them from anyone else. There can be no exceptions while I’m at the helm.”

Feeding Bad News Up the Line

Simple enough. But what about delivering bad news to CEOs and other members of senior management who have a tendency to shoot the messenger? Unfortunately too many managers opt to take the path of least resistance by avoiding unpleasant confrontations with senior managers, even if this is to the detriment of the company. Only you know how welcome your comments and suggestions will be to your senior management team. And the purpose of this article is certainly not to thrust you into a career “death spiral” for boldly volunteering bad news in tough economic times.

That being said, as an officer and manager of your company, you are indeed responsible for the well-being of the organization and the fulfillment of its mission of profitability. If you choose to deliver bad news to the CEO or other member of senior management, here are some tips on communicating your message:

Step 1: Confirm your commitment to keep the enlightened CEO informed. Every CEO relies on his immediate core of senior managers to remain abreast of changes in company circumstances and employee attitudes. When a member of senior management finds out about unpleasantries that were not communicated in advance, the tongue lashing typically sounds something like this:

“Why am I first finding out about this now? I can’t be everywhere all the time, and I rely on you to keep me informed of changes in the organization that impact our business. I shouldn’t have to reprimand you for failing to fulfill an essential function of your job. What am I paying you for, anyway?”

Point taken. The CEO never seems to acknowledge at the point of castigation that the last time a manager brought bad news to his attention, that manager was pummeled and bloodied and became the hot topic of water cooler banter for a month.

Here’s an example of how to approach a situation like this:

You’re a regional business manager who’s responsible for payroll and planning budgets, and you need to share some touchy information with your senior manager. “I have some information to share with you that might surprise you, and I’m not looking forward to this conversation, but that’s why you pay me. I figure if I can’t bring problematic issues to your attention, then I’m not doing my job. It’s August, and I believe that we should plan to go over budget on our ‘salaries and wages’ line for the year. If you agree, I would need to upgrade the salary line on our Estimate 3 report by $33,300 to capture the variance that I’m proposing.”

Step 2: Briefly outline the pros and cons of your proposal: “The good news is that we successfully navigated a number of unexpected challenges in the first three quarters, including four layoffs in our Seattle sales office as well as the renegotiation of the Tacoma branch manager’s contract. Paying out severance for those four employees as well as for that unexpected contract battle affected our wage line by $74,000. We were able to sustain that amount in our overhead budget because we allowed sufficient wiggle room in case of emergencies.

“The ‘surprise’ has to do with the fact that we need to put a retention program into place for some of our key players. Many of our people feel as if they’re treading water in their careers and are looking to make up for lost time salary-wise. If we don’t increase their base salaries in the fourth quarter, either by promoting them or implementing equity adjustments to bring their pay in line with competitor companies, then we’ll lose them. We just don’t have the bench strength to replace key players, and it’s worth considering a budget overage to keep them in place.”

Step 3: Overcome the CEO’s initial objections pre-emptively, and do the math when focusing on the how. Remember, the proposal needs to be tied to the bottom line—expenses. Any “lofty” proposals that haven’t been logically thought out or financially justified will seem naïve at best and could result in a loss of your credibility.

“I know what you’re thinking: We’ve responded logically to the recession by not back-filling open jobs and keeping payroll increases down by freezing promotions and equity adjustments. So why the change in strategy now? The bottom line is that we have identified 16 key players in total—six for promotion and 10 for equity adjustments—who will require $65,000 in payroll upgrades. We will only be able to permanently offset about half the variance using other budgeted headcount. Therefore, I’m recommending that we add an additional $33,300 to the ‘wages’ line to reflect the proposed upgrades for the Western region. Before we discuss the individuals in question, what are your initial thoughts?”

Regardless of the senior manager’s ultimate decision, you’ll have created a compelling presentation with a logical business conclusion. More important, you’ll have couched the bad news in a contextual framework that forces your boss to consider your proposal on its objective merits, and you’ll have fulfilled your responsibility of providing organizational insights that the senior manager may not have focused on. This is a well-done opener that will hopefully lead to further questions and investigation.

Giving You the Bad News

When it comes to working with your subordinates, creating a culture of trust is an amalgam of formal guidelines that you establish as well as informal, unspoken cues that you give. Of course, there are tools available to help you do this. For example, inviting your employees to evaluate themselves before you judge them during the annual performance review process allows them to involve themselves in their own career development, while placing you in the role of career mentor and coach rather than unilateral judge and decision-maker.

Similarly, adding a question to a one-on-one meeting with a subordinate like, “What could I do differently to provide you with more structure, direction and feedback or otherwise help you prepare for your next move in career progression?” would likewise help establish trust in your relationship. If your subordinates feel that it’s safe to stick their necks out of the foxhole and share bad news with you, there’s a greater chance that you’ll hear about problems proactively while you can still fix them.

But what do you do if a subordinate stubbornly refuses to provide you with negative feedback? If a feeling of “flying blind” plagues your relationship with a particular staff member, a written response may be an appropriate measure. Of course, we typically think of written responses in the form of a progressive disciplinary written warning, like this:

“Lori, your failure to meet the deadline for our Estimate 3 financial projections resulted in my having to work till midnight last night to ensure that your information was properly integrated into the divisional report. More significant, your failure to notify me in advance of your inability to meet your project deadline precluded my assigning additional staff or resources to help you. As such, your failure to communicate is a separate infraction that demonstrates an inability to meet the fundamental demands of your job. Failure to provide immediate and sustained improvement may result in further disciplinary action up to and including dismissal.”

However, written responses need not only appear in disciplinary warnings. Occasionally, a letter of clarification or a revised job description could achieve the same result without the negative sting attached to a warning. In any case, be sure that you clearly document your expectation that open communication, especially regarding potentially bad news, remains the subordinate’s ultimate priority in all business dealings.

Avoiding the ‘Sucker Punch’

When it comes to obligations of sharing bad news, no lesson is more critical than dealing with requests for confidentiality from subordinates. Corporate managers often err on the side of protecting employees’ privacy when their subordinates share improprieties in the workplace.

“What they fail to realize,” according to Ann Kotlarski, employment litigation partner at Seyfarth Shaw LLP in Los Angeles, “is that once managers are put on notice of acts relating to sexual harassment or workplace discrimination, for example, then the entire company will have been placed on constructive notice from a legal standpoint. In other words, a manager’s unwillingness to share negative information with senior management in an effort to protect the subordinate’s request for confidentiality is often used against the company in court. And the ‘Mr. Nice Guy’ approach to managing, although done in good faith on the part of the manager, could have devastating consequences for the company in the legal discovery process.”

What’s the best way to handle this? “Simply add a disclaimer to your management vocabulary,” advises Kotlarski. “If staff members ask to speak with you in confidence, tell them up front that your ability to keep the information confidential depends on the nature of the issue. If it has to do with discrimination, harassment, potential violence in the workplace or any kind of conflict of interest, then you’ll have an obligation to disclose that information to senior management. Otherwise, there’s a good chance that you’ll be able to protect the confidentiality request.”

Here’s the happy ending: Zukor’s employees had nothing to fear. He not only survived the bad news about the “Gone With the Wind” earnings, he shaped Paramount into one of the largest movie studios in the world, serving as honorary chairman until his death in 1976 at age 103.

Paul Falcone is director of international human resources at Paramount Pictures in Hollywood, Calif. He is the author of four books published by AMACOM, including The Hiring and Firing Question and Answer Book (2001) and 101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline and Termination (1999). This article represents the views of the author solely as an individual and not in any other capacity.


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