Financial Crisis: Communicating with Employees

Send e-mails, have meetings, walk the halls: Keeping your workforce informed is essential to morale and productivity

When New York's Twin Towers came down on September 11, I was hosting a show for a now-defunct national television network based in San Francisco. What happened over the following days and weeks convinced me to devote my career to the study of leadership communications. Actually, it's what didn't happen that struck me. Senior leaders at the network didn't communicate internally regarding the crisis and what it would mean for the company and our jobs: no e-mails, no announcements, no staff meetings, nothing. Rumors ran rampant, and to this day I know of some former colleagues who lost so much respect for their supervisors that they would never think of working for them again.

So while I was disappointed, I wasn't surprised to see a new national survey of 514 workers showing that most are not receiving information from senior leadership regarding the impact of the financial crisis. Conducted between Oct. 3 and Oct. 6, when the Dow Jones industrial average fell below 10,000 and the U.S. Labor Dept. reported the highest number of monthly job losses in five years, the survey showed that 54% of respondents had heard nothing from senior leaders about the implications of the financial crisis. Seventy-one percent said they wanted to hear more from their company's top executives about current economic problems.

Harris Diamond, CEO of Weber Shandwick Worldwide, the PR firm that commissioned the survey, told me: "If you look at the survey results...74% of employees hear colleagues and co-workers talk about the economic issues, which feeds the rumor mill. Some of the rumors might be accurate, but most are false. Rumors cause people to think the worst. The result? A demotivated workforce. People freeze up waiting for bad news."

During times of crisis and uncertainty, employees are looking for a credible leader who offers candid information. Here are three ways to manage the information void:

Recognize that the void exists in the first place. Managers are inclined to stop communicating because they believe—wrongly—that saying nothing in an uncertain climate is better than giving vague information. Simply by acknowledging the fact that you don't know what the future might hold gives employees confidence. At least it shows that management is thinking about the issue.

Discuss specific issues facing your company. Explain the impact of the credit crunch. Has it had an effect on your company's ability to get loans? If so, how will that hurt the company's growth plans? If you're in good shape, your staff wants to hear that, too. Recently, I met a construction contractor whose company has several offices around the country. He told me that he was lucky to have locked in a five-year loan despite the credit crunch. I told the contractor: "Your employees must have been very happy to hear that." "I haven't told them yet," he responded.

I was shocked that this contractor shared the news with me—a guy at a dinner function whom he had never met—before sharing it with his employees. How many water-cooler talks had taken place to fill the information void at his offices?

"As a manager, you're having conversations about the economy with your spouse and friends," says Diamond. "You should be having these conversations with your employees. The guy on the factory floor is concerned about the same issue and wants to hear from you."

Make yourself available, and spread your message in person and online. Assume people are in a heightened state of anxiety, so increase your normal modes of communication, such as memos, meetings, and walking the corridors. Diamond gave me examples of companies that recognized the information void and that have dramatically stepped up their Webcasts, Web meetings, in-person staff meetings, and intranet updates.

Your staff wants to know what the financial crisis means to the future of your business. It's your responsibility to fill the information void. Your employees will be more productive and less likely to jump ship when they know what's coming next.