Breaking Bad News: 6 Key Steps for Delivering Negative Messages to Staff

Every CEO loves to step before a podium to crow about the latest quarter’s double-digit gains. But what if the update isn’t so cheerful? How senior executives handle the distribution of bad news to employees — especially if it’s a negative financial update — can make the difference between a workforce that doubles down and one that checks out.  

“When the news is tough, leadership matters more than ever,” said Sujay Saha, founder and president at Cortico-X, a business strategy firm based in New York City. “The most effective updates are rooted in honesty but delivered with humanity.”

If a CEO’s communication is muted, skewed, or leaves key outcomes out of the messaging, employees may lose trust in chief decision-makers. The choice is clear: Rip off the bandage or let the wound fester. People can adapt to tough realities, but they can’t navigate what they don’t know. In the absence of facts, rumor and fear rush in to fill the gap.

Saha said employees don’t expect perfection when hearing a difficult message, but they do expect transparency, context, and a reason to believe. “That means being upfront about the challenge and, perhaps most importantly, showing them their role in the comeback story,” he said. 

Companies that get this messaging right don’t just recite financials. They connect the dots for employees. “They clarify what’s happening, why it matters, and what we’re doing together to fix it,” Saha added. “When you treat employees like trusted insiders, they act like owners.”

Why Transparency Matters Most Now

Even when the message is difficult, the way it’s delivered can have a measurable effect on employees’ well-being and sense of security. Transparency is more than a leadership ideal, it’s a tangible factor in how workers perceive their job stability and mental health.

Employees are feeling the economic strain. Nearly half of U.S. workers (49%) surveyed by SHRM during the second quarter of 2025 said that the current state of the economy has had a negative impact on their mental health. 

The good news: Most employees believe that their employer is telling them the truth about how the economy is impacting their organization. A full 59% of U.S. workers agreed that their employer is transparent about how economic conditions affect the company, according to SHRM’s April Current Events Pulse survey. Conversely, one in five (20%) disagreed that their employer had been transparent, while 21% neither agreed nor disagreed.  

The data highlights a striking difference: Employees who perceive their employer as transparent feel far more secure than those who do not. The survey found that U.S. workers who saw their employer as transparent were far less likely to worry about job security — 28% versus 60% of those who felt their employer was not transparent.

6 Ways to Turn Tough News into Team Strength

How can company leadership plan effective updates that make workers feel secure and want to stay and work harder, even if the company’s financials or the economic outlook aren’t ship-shape right now? Management experts advise adopting the following strategies.

1. Prepare a messaging plan first. Employees can handle bad news if it’s shared with honesty, clarity, and genuine empathy. But trust erodes quickly with sugar-coating.

“To start, prepare leaders and managers with talking points and FAQs so they can effectively help their teams understand what’s happening and why,” said Stacey Hajdak, senior vice president at Ruder Finn, a global communications firm in Philadelphia. “Empower teams to connect their unique role in making improvements, contextualizing how each unit can contribute to solutions.”

2. Opt for all-employee meetings. All-employee gatherings are a chance for leaders to unify their organizations around purpose and vision and companies in front of all workers at once.

“Prepare all-employee meetings thoughtfully and collaboratively to craft messaging that’s clear, forthright, empathetic, and directly addresses difficult questions honestly,” Hajdak said.  “Leverage artificial intelligence to double-check the tone you want to strike.”

Before sharing companywide, equip managers through dedicated briefings, team-related impacts, and robust FAQs to support them as amplifiers. AI can help with brainstorming questions to anticipate. Remember to update deskless employees in practical formats such as physical bulletins or employee apps.

“When delivering the update, get to the crux of the message with clarity, grounding the message in your organization’s purpose,” she added. 

3. Measure the impact. Leaders shouldn’t simply assume the message was received as intended. “After the gathering, use a pulse survey to understand how the news landed and what questions remain, creating a foundation for two-way dialogue that builds trust and engagement,” Hajdak said.

4. When delivering tough financial news, think “win-win.” Consider what employees want and help them get it.

“Connect company recovery to employee results and stability,” advised Andres Lares, CEO and managing partner at Shapiro Negotiations Institute in Baltimore. “Provide a clear-cut direction and path for success and pay attention to what information you’re sharing and how you're communicating it.”  

Also, joint ownership can be created by involving teams in developing solutions. “Remember that emotions aren’t obstacles to resolution,” Lares added. “They can fuel solutions when handled properly.”

5. When facing significant financial challenges, consider a team approach. Take a page from the quarterly reporting handbook and build a team when delivering sour financial news.

“The CEO demonstrates organizational commitment by framing the larger vision and strategy, while the CFO brings technical credibility to financial specifics,” Lares said. “The messenger must be prepared to respond authentically to difficult questions. Rehearsed and ‘political’ responses undermine trust.”

C-level execs should be situationally aware when choosing speakers to address the company staff.

“It could be the CFO who leads the engagements, but if the big impact happened because of [the] research and development team, for example, then inviting the head of R&D could be part of the presentation,” said Natasha Kehimkar, founder and CEO of Malida Advisors, a San Francisco-based organizational effectiveness firm. 

 Regardless of which executive is taking the lead, remember that not all employees come with the same understanding of financials. 

“It’s important to provide context and explain,” Kehimkar said. “If the news is bad, share that it’s bad, articulate how bad and why people should care, and what control and agency they have in addressing the problem.”

Also, remember that transparency requirements may differ by organization. “There may be differences depending on reporting requirements in public/private companies,” Kehimkar said. “Private companies can often share a lot more detail, and smaller firms often do, in the name of transparency, particularly if it’s a value they hold dear.”

6. Acknowledge staffers who adapt to the moment and spur positive change. Hajdak advised corporate leaders to celebrate moments when employees do great work, support a customer, think innovatively, or improve a process after receiving negative company news.  

“Remember that internal messages often find their way to external eyes. So, ensuring communications reflect your values is important,” she added.  

Brian O’Connell is a freelance writer based in Bucks County, Pa. A former Wall Street trader, he is the author of the books CNBC Creating Wealth (John Wiley & Sons, 2001) and The Career Survival Guide (McGraw Hill, 2004).