For many years,  a small technology company had made very healthy profits. The employees had got accustomed to annual pay increases. It was almost accepted as the norm.

However, in the past year, the company had gone through a rough patch and sales had been disappointing. So it was decided by the Board that there would be no annual pay rise or bonuses based on last year’s performance.

So it was the left to the sales director to pass on the bad news to all employees which he did on a one to one basis. He started off by saying that pay rises were never guaranteed each year. He then highlighted the factors that the company consider each year before awarding any pay increase or bonus.

He spelt out in a straightforward manner, the difficult financial situation the company was facing. He acknowledged the decision had been extremely difficult for the company and that they had considered all available options before reaching their conclusion.

He realised that these conversations would not help colleague morale. He asked all his managers to brainstorm with their teams ideas for improving business processes and how to reduce costs with all good ideas being rewarded.   

Good employee performances should be highlighted and rewarded in non-monetary ways—‘employee of the month’, meal vouchers for taking family members out for dinner, a month’s free pass to a gym etc — all small things but help to make people feel appreciated.

People will accept bad news if it is honestly explained to them. If everyone throughout the organisation is treated in exactly the same way, it helps create a culture in which everybody feels equal. This, in itself can lead to a ‘can do ‘ attitude in the future.