Downward Communication in Difficult Times

What will be an ideal response?

Managers frequently need to deliver bad news,94 and proper downward communication can be particularly valuable during difficult times. During corporate mergers and acquisitions, people are anxious as they wonder how the changes will affect them. Ideally—and ethically—top management should communicate with employees about the change as early as possible.

But some argue against that approach, maintaining that informing employees about the reorganization might cause them to quit too early. Then too, top management often isolates itself, prompting rumors and anxiety. CEOs and other senior execs are surrounded by lawyers, investment bankers, and so on—people who are paid merely to make the deal happen, not to make it work.

Yet with the people who are affected by the deal, it's important to increase, not decrease, communication.95

In a merger of two Fortune 500 companies, two plants received very different information.96 All employees at both plants received the initial letter from the CEO announcing the merger. But after that, one plant was kept in the dark while the other received continual information about what was happening. Top management told employees about the layoffs, transfers, promotions and demotions, and changes in pay, jobs, and benefits.

Which plant do you think fared better as the difficult transitional months unfolded? In both plants, the merger decreased employees' job satisfaction and commitment to the organization and increased their belief that the company was untrustworthy, dishonest, and uncaring. In the plant where employees got little information, these problems persisted for a long time. But in the plant where employees received complete information, the situation stabilized and attitudes improved toward their normal levels. Full communication helped employees survive an anxious period and offered symbolic value by signaling management's care and concern for employees. Without such communications, employee reactions to a merger or acquisition may be so negative that they undermine the corporate strategy and future performance.