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Publications:A Case of Recession Fatigue - the importance of Employee Communications by Doug Shimada, April 15, 2009

When the month was over and the revenue figures were compiled, the numbers were up compared with a year before, but were below plan. With strong results from earlier in the year, the monthly results were not cause for concern. The management team, as was their practice, met to discuss results and define actions for the remainder of the year to ensure forecasts was met. The meetings were held onsite in the company conference room. Given the personalities on the management team, discussions were “lively”, at times even intense but always with the goal of developing a shared solution.

The day following the management meetings, the “vibe” in the company was unusually tense. Whispers of failure to meet plan were tied to “overhearing yelling in the boardroom”.

By the late morning, the Executive Assistant approached the President to enquire if the company was o.k.? Surprised at the question, he answered that indeed the firm was O.K. and wondered about the reason for the question. He was floored to learn that office scuttlebutt had it that the company was readying to lay off employees because of poor financial results.

A hastily called company meeting, followed by an email from the President, shared news that though the company had indeed failed to make plan, good results from earlier in the year provided some cushion such that the results were satisfactory, year to date and the management team was confident that the targets for the remainder of the year were attainable.

In hindsight, perhaps the thought process that led employees’ to speculate that a layoff was imminent was predictable. Fueled by constant media attention on a “bad economy”, difficulties and bailouts in the financial and auto sector, rising unemployment, employees are primed for “bad news”.

Hearing that the company had missed targets, coupled by heated dialogue in a closed door management meeting, led even those with “inactive” imaginations to assume the worst.

Fortunately, the leadership group was able to address the rumour and diffuse it before significant damage was done. The situation points to the increased importance of communications in a timely and transparent manner, especially during difficult times.