Handling Difficult Conversations through a Downturn
Filter tag: Change Management and Executive Outplacement, Culture & Organisational Effectiveness, Leadership Capability, Strategies for Growth
A global survey by the Conference Board found that over 60% of CEOs anticipate a recession coming in the next 12 to 18 months, with 15% of these CEOs reporting that their region is already experiencing a recession. Many businesses and their leadership will soon face pressures to navigate the impending financial challenges and continue delivering results whilst likely having to make difficult staffing decisions as a result.
We are already seeing this from some of the world’s biggest names, with Netflix laying off over 400 employees after a rough start to 2022, JPMorgan laying off and reorganising hundreds of staff in their mortgage division following an interest rate spike, and Klarna cutting over 700 staff with their CEO controversially publicising the names of those made redundant.
If these businesses that we have widely viewed as recession-proof or too promising to fail are struggling, you would be naïve to think that your own organisation will not face some tough decisions in the months ahead. The pandemic was the first domino tipped in what is likely to be a series of economic peaks and valleys over the coming years. With that in mind, it is no longer a matter of if a tough financial period or recession will come to pass, but rather a matter of how to properly navigate these situations with your people when they arise. It is likely that leaders will be having difficult conversations more often, and there is real value in learning how to master this type of communication. So, how do you do it? What do you need to consider?
Types of Challenging Conversations
In the current climate, the top challenging conversations that our clients are finding their leaders need most support with are:
- Informing an employee that their performance is not at the right level: Turbulent times are the most inopportune moments for performance to slip, though this may happen as the personal impacts of recession and the stress to deliver weigh on your employees. Other times, an employee’s performance might be good, but has the potential to be great. In a recession, you need all team members performing at their very best and as a result, you may have to have some difficult conversations about performance. These conversations may not just involve your junior or mid-level staff. Often, peers or individuals in senior roles may also not be performing at the necessary level as businesses aim to evolve and grow, which requires them to change their style or upskill to keep up. The pressure will certainly be on for senior roles in a position of responsibility in an economic crisis, and there is no room for complacency.
- Informing an employee their role is at risk: Letting an employee know that their role is at risk can induce anxiety for both the person receiving the message and the one delivering it. Honesty is always the best policy when communicating with your people, but you need to decide what level of information to share to avoid causing more harm than good. On one hand, the news may instil necessary pressure to perform at a higher level. On the other, the employee may shut down under the stress. These conversations can go either way and vary by employee, so it’s important to anticipate and plan in advance.
- Confirming to an employee that their role has been made redundant: This is the conversation that no employee or manager wants to have. Letting someone go is one of the most difficult people decisions a leader will have to make, and the situation becomes much more heightened when there are financial stressors at play. Your reasons may be business performance based or financially focused, yet neither will come as much consolation to whoever you must let go. These conversations are the most challenging to master and require the highest levels of empathy and consideration.
- Informing an employee that they aren’t getting a salary increase, bonus or a promotion: Being made redundant is a tough blow to bear but having one’s career progression halted can be just as upsetting. In most organisational structures, hard work and loyalty tend to yield reward in the form of financial compensation, a new role, or both. Not receiving these expected incentives as a form of recognition might feel like a bit of a slight to the employee and can negatively impact morale and individual contributions.
A Checklist for Handling Challenging Conversations
Businesses appoint individuals to positions of leadership to provide their people with trustworthy figures to lean on in times of trouble and to embody organisational purpose. Effective leadership is increasingly difficult to deliver and comes with a lot of responsibility. A number of leaders don’t receive adequate support to deal with change during turbulent times, and therefore may not feel practically or emotionally ready to deal with these challenges when the moment comes.
So how can leaders prepare themselves for these challenging conversations, and successfully deliver sensitive news?
- Don’t close the gates of communication: It can be tempting to shy away and communicate less frequently and less openly in situations where the leadership team lacks clarity, as the feeling is often to wait until there’s more certainty to share. Avoiding the situation often makes it worse, builds resentment, and can damage the credibility of the leadership team. If anything, your people need to hear from their leaders more frequently during these times, even if it’s just to say that that situation is being addressed and more information will be shared as it is gained. Clear, regular, and transparent team communication are more important than ever, no matter how ambiguous the situation.
- Plan out the conversation in advance: Oftentimes, the hardest part of having a difficult conversation is knowing where to start. Therefore, it is usually helpful to decide on your objectives for the meeting in advance, list the main topics you wish to cover, and indicate how you want to connect them all together. You do not need to script the entire conversation beforehand, but it might be helpful to keep a mental list of a few specific messages that you want to convey. Determine how you are going to open the conversation and rehearse to build your comfort levels.
- Understand the three levels of processing: When planning your discussion, understand that there are potentially three levels of processing all taking place within this singular conversation. The first is the Factual Level, or the basic facts of what’s happening. The next is the Emotional Level, which is how the employee feels about the news being delivered. The final level is the Identity Level. This is often the most complex and tricky level to navigate as it involves what the employee feels the topics of this conversation say about them as a person. Being let go or told that one’s performance is not meeting an expected level can feel very personal. By understanding that these three levels of processing will be happening simultaneously and working to anticipate what points you may need to make at each level will enable you to be much better prepared.
- Be empathetic but remain emotionally steady: While you do need to maintain your professionalism to keep on track during these conversations, it’s normal to have some uneasy or sad feelings about having to deliver tough messages. At the end of the day, we’re all human. You need to acknowledge what you are feeling within yourself, but do not allow these emotions to lead to stress responses, frustration, rumours, or other non-productive behaviour. Team members are always watching and taking their cues from their leaders. While it’s okay to let that vulnerability shine through in the form of empathy and understanding, how you show up in times of crisis matters to your people. As a leader, you’re not required to be unapproachable or unfeeling, but you do need to keep collected. Your people need leaders who seem calm in the face of chaos to provide reassurance and stability. Let the recipient of your bad news know that what they feel is okay and that while you empathise with them, as a leader you have a commitment to remain emotionally steady for the rest of your team. Your ability to remain collected in these tough moments will be of benefit to those who will be looking at you for cues.
- Anticipate the hardest parts: If starting the conversation is the hardest part, then finishing it is a close second place. What will you say to bring the meeting to a close? How will you manage if the person is still upset? You may choose to open the discussion up for questions to give the employee a chance to share their perspective or gain closure. If holding a conversation about performance or a role being at risk, it might be beneficial to end by agreeing some actions. What can the employee do to improve their standing? What outcomes will you be looking for post-meeting, and by when? If letting an employee go, you may choose to acknowledge their hard work and contribution whilst recognising the emotions they’ve expressed. Where internal or external support such as career transition or outplacement services are available, discuss the benefits of this support and next steps. The objective is to end on as positive a note as possible, even if spirits are low. In the best-case scenario, your message will be accepted and the conversation will close with a level of understanding. But it’s also important to prepare for the worst. Emotions may run high, and the employee may react poorly. Anticipate any feelings of anger, shame, anxiety, or sadness and determine how you might react to those emotions. By preparing for the best- and worst-case scenarios, you’ll be ready for anything in between.
Success in a leadership role involves being calm, open, and steady, all while painting a clear vision for the future. The expectation is that you will treat everyone fairly and equitably and hold individuals accountable when they cross a line or aren’t delivering what’s needed for the team to come out on top. This can be difficult to do when economic stressors are weighing on you, the business, and your people.
Difficult decisions and challenging conversations come with the territory of modern leadership, and our current economic conditions will mean having to do so more often. Remember that you are the steady rock for your people in these times, but you are also still human. Check in with yourself, be clear on your objectives and outcomes, and prepare for every possible scenario to approach these situations as successfully as possible.