In any organisation, you have to discuss bad news but few people consider where it is discussed. How you discuss bad news will influence, if not determine, the success of your company. The issue is more than critical upwards communication in which junior staff have to be able to report bad (or critical) news upwards either formally or informally. The issue is more than a concern with the learning organisation and double loop versus single loop learning where a company has to learn from its mistakes. Instead, it is something fundamental, which was missing at Enron. At Enron, there was literally nowhere to discuss bad news. Bad news was not suppressed staff had no place to discuss it outside existing management structures. The reporting lines within services and within organisations can reinforce the existing cultural or managerial expectations about bad news or good news. If there is no place for the junior or midlevel managers, who understood something was going wrong, to meet to discuss the issues, then the organisation lacks a critical core needed to deal with bad news. The critical core is rarely at the senior level because they usually do not know about the bad news or take a personal or organisational interest in managing such discussions.
How, where and why BN is discussed will tell you about the organisation and its health. If your management team meetings or extended management team meetings are only focused on good news or what is planned, you give the implicit message that only good news or approved news is to be brought to the meeting. The desire to hear good news, especially in collective meetings, is understandable. No one likes to hear bad news no matter how important it may be. The larger the meeting the less it will be an appropriate place to discuss bad news because it can be seen as criticism. If the bad news becomes a criticism, then in a large group setting it can become like a re-education camp where underperforming units are held to account or to blame. Such an approach will be unintended, but it can easily become the default setting when people set out to discuss bad news. The challenge is to find the right place, the right amount of people, to discuss bad news.
What is bad news?
To understand the problem we need to consider the types of bad news. Broadly speaking there are three types of bad news (BN)
- BN staff know
- BN only managers know
- BN only senior managers know.
Bad news in an organisation is usually of three types, performance, external shocks, and internal shocks. Bad news is not idle gossip or personal problems of staff. Bad news is something that affects the organisation either directly, we are going out of business, or indirectly, division x has lost 10 billion dollars and we need to find the money from all budgets. In most cases, but not all, the bad news has a direct and immediate effect on the company’s reputation. However, bad news is not simply poor performance because performance related issues have an agreed process nor is it well known public news such as the outcome of a trial or a long awaited regulatory sanction.
We may believe that discussing bad news has an obvious reason. However, the reason for discussing bad news reflects an organisation’s cultural norms. This is different from a culture of good news. Instead, it is based on the idea that employees have to follow an internal cultural code that dictates why, how and where bad news is discussed. On the surface, this appears obvious because we discuss bad news when there is a problem to be solved. However, this overlooks the secondary issue of why is there a problem or more precisely “Why do you think there is a problem that needs to be discussed?” A cultural norm may suggest that why you discuss bad news can be understood depending on its context. Is it about under performance? Or is it a threat, a criticism or is it whistle blowing? Senior managers can be unwilling or unable to ask for bad news or to give bad news because the culture norms within their organisation create the fear that they will “make their boss” look bad or be seen as a trouble maker.
Bad news is always a challenge to the chain of command
A closely related concern is the chain of command. The chain of command provides a way to communicate and control decisions within an organisation. It also provides a place and a method for discussing bad news. The discussion will occur within the chain of command and be passed upwards or it is resolved at the proper level. The command level at each level is the place where bad news is to be discussed. One can be disciplined for violating the chain of command by telling a senior manager bad news that the middle manager will tell them. However, the command and control system has problems because it does not create a place for discussing organisation wide bad news.
Most bad news is hidden until it goes away, solves itself or explodes
In many organisations, bad news is kept in silos or hidden because of the chain of command. In some cases, the corporate or departmental culture wants to avoid bad news. If bad news is suppressed or hidden, it can reach dysfunctional levels. Most organisations are very good at single loop learning. They can solve a problem as it emerges. Many companies are not good at double loop learning where they prevent problems by modifying systems to remove the cause of the problems. If a company relies exclusively on single loop learning, then managers only deal with symptoms because that is what they are rewarded for doing. If bad news is not discussed openly or in a place where a wider perspective can be used, manager can learn that the best way to avoid problems is to avoid reporting them or discovering them and not dealing with the causes. They simply explain things are going ok and soften the news so that bad news is watered down into mild news or becomes god news.
A place to discuss bad news creates the opportunity to define its limits.
If senior managers do not have a place to discuss bad news they may hide it from other senior manages. In this case, the chain of command removes the places where bad news can be discussed. As a result, senior managers only find out about bad news from external events, bad news in the press, or from external inquiries, like an auditor, who suddenly create a space where bad news can be discussed because individual managers who may be able to see the issue cannot meet to discuss the bad news. In these situations, the performance management system and performance information become a proxy for discussing bad news. The art of indirect reporting or simply focusing on the targets that are working well is rewarded. Instead of discussing bad news, the conversation is about under performance and a discussion focuses on the quality of the performance indicators and the performance management process rather than the actual problem, the bad news. People seek to change the target or say that the target is unfair or can be qualified in a variety of methods. Bad news is not discussed openly.
Are your corporate cultural norms keeping such a place from forming?
Culture norms in an organisation can inhibit bad news and remove the areas where it can be discussed. The culture norms of an organisation can make it appear that to discuss bad news you have challenged the organisation. You are a troublemaker. When these norms exist, bad news is only discussed by indirect means. People gossip about it or talk in the hallways but never in the meeting room. The bad news becomes capital or ammunition within the bureaucratic negotiations or battles within the organisation. For example, if a junior employee discovered a security leak. They would not have a place to discuss it. Instead, they would tell their senior managers so they can use this information and manage it. The demand that such actions be channelled upwards means that bad news is contained and managed within the chain of command.
What is to be done?
First, an organisation must create a place where people can discuss bad news. A formal meeting could prove counterproductive as no bad news is ever discussed. A place could be created indirectly; so that challengescan be considered to create, the space to discuss that comes from discussions that cover Strength, Weaknesses Opportunities and Threats (SWOT) meetings. At the same time, the organisation can look at how it does communicate critical informationupward and link that to the
way managers meet to discuss topics. The best approach is for senior managers to convene off the record meetings where they ask pointed questions like “Tell me what is going wrong and what needs to be done.” Such meetings cannot emerge overnight, as the senior managers have to be trusted not to be using this to seek out disloyalty or doubt and to be aware that few employees will speak the truth, at least initially, in such settings.
Bad news is a reality. What you can control is how you manage it. If you do not have a space for discussing bad news where managers can meet to explore the issue, then you may have more than bad news to manage.