How to Deliver Bad News to Your Employees: What to Do When Your Benefits Change

Delivering bad news to employees is always a bummer, but when it impacts their benefits, it’s even worse. Whether it’s telling them about the discontinuation of a favorite program or announcing a rate increase, there’s no easy—or right—way to do it. Do you send an email, hold a virtual town hall, discuss it during 1-on-1s? Isn’t delivery dependent on the news itself? It can be a complex process with case-by-case stipulations. That’s why we’re breaking down how to deliver bad news to your employees regarding benefits changes. 

How to deliver bad news at work: lay the foundation

To learn how to break bad news to employees, the first step is actually about you, the HR leader. If you get your mindset right, it will make the process much easier. You need to understand that you can’t control how your employees will react to your news. They’re going to feel how they’re going to feel. However, you CAN control how to communicate the bad news, and how you respond to their reactions—that should be your focus. 

You’ll also need to toe the line of understanding your C-suite’s reasoning for the benefits changes, while empathizing with how those changes will impact every level of employee. In a way, you’ll need to be Switzerland, effectively presenting leadership’s point of view and also listening to the frustrations of the team. 

Typically, bad benefits news falls into one of two buckets: ‘Sorry, but the company is decreasing coverage,’ or ‘Unfortunately, we’re increasing costs.’ If either of these two things happen, employees may be understandably upset. And can you blame them? No. Losing nice things sucks. 

How to break bad news to employees in 5 steps

1. Develop a communication strategy: deliver the news “in person” first followed by a documented announcement.

When figuring out how to communicate bad news in business, follow a targeted approach. Remember even small changes to a benefits plan can have a significant impact on your employees, especially when it’s money-related.

Don’t leave it to a company-wide email, or similar out-of-touch announcement letter. Delivering bad news to employees letter-style can lead to resentment, confusion, and a callous representation of HR and leadership (not to mention, some people might not regularly read their communications). 

Instead, communicate the benefits changes in a live meeting (virtually or in-person), with the option for an open Q&A afterward. Don’t beat around the bush, layout the detailed changes and reasoning behind it (more on that in step #3). Then, follow up with documentation so that employees have something to refer back to while digesting and navigating the benefits changes.

Advantages of good communication in the workplace when bad news is involved.

Here are a few more communication tactics to consider plus the benefits you can expect when you use them:

• Directness: No matter what the first means of announcing your benefits changes, being direct will win the respect of your team members. A recent scientific study shows “that when it comes to receiving bad news, most people prefer directness, candor and very little—if any—buffer.”
• Anti-buzzword policy: Speak in plain English. As this spot-on article from communication expert, Alison Davis explains, “Employees perceive corporate-speak language as packaged and therefore inauthentic.” 
• Documentation: Employees might be reeling after you deliver bad news, immediately thinking how it will impact them personally. Having detailed documentation afterward will give them a resource to refer to if they have questions or concerns.   

2. Test the announcement to get a feel for employee’s reactions. 

To bette runderstand how to break bad news to your employees, take the pulse for possible reactions. Pull a small group of trusted employees together (including corporate influencers) and get their opinion on how changes will be received. This is the best way to get a read on all potential responses. Who knows? You may actually be surprised by how few employees think the news is as bad as you thought they would.

Regardless, sourcing some initial feedback can help you adapt and pivot your communications plan as necessary, or be prepared to answer some FAQs that pop up. 

3. Practice transparency in your dialogue.  

When delivering bad news to employees, don’t just drop the news like a bomb without context. 

Too many organizations feel like they need to be secretive, or follow a stealth-mode policy. When deciding how to communicate bad news in business, the solution should always involve honesty.

“One of the secrets I’ve found in managing effectively is also one of the steps that managers skip most often. It’s making sure you always talk about the why. Sharing a decision with your team? Tell them why you made it.”

Alex Cavoulacos, President & Founder, The Muse

Of course, the level of honesty might vary, but you’ll build more trust when you offer the “why” behind benefits changes. Even if it’s high-level financial reasons, bad news lands better if your team receives an explanation and justification. 

4. Leverage examples to help your process. 

Learning how to communicate bad news to employees is not simple or straightforward. To work smarter and not harder, take advantage of some examples to help with your journey. 

Use these examples:

• Increasing health insurance costs? Use this template from SHRM to document your changes. (But like we mentioned above — this isn’t the only step you should take. Be sure to address these changes in person first!)

• Ferguson needed to communicate new health plan changes to 23,000 employees with a clear and consistent message. They crafted a promotion campaign involving email, postcards, live demos, and a video featuring the Ferguson CEO. Combined with the use of ALEX, this shows you that changes for large companies might need extra effort. 

• Learn from Jellyvision’s Chief Administrative Officer, Kurt Hirsch. When we changed how we offer employer 401K matches, Kurt didn’t bury the lead. He jumped right into the news, and explained why the new policy strengthened Jellyvision’s financial footing, and how that would help all employees with job security. And once employees had a chance to digest his email, Kurt kept his door open to anyone who had questions.

5. Incorporate technology to help communicate your benefits updates and changes in the moments that matter.

Use our actionable tips on how to deliver bad news to your employees, but also ensure you have benefits communication strategies in place year-round. 

A tool like ALEX provides a 1-on-1 conversation with your employees to help them understand their benefits package, outline their options, and highlight any changes they need to know. The platform works as a communication hub to back you up with big changes and provide detailed information, where and when your team wants it. 

Delivering bad news to employees—there’s no right way.

You might think you know how to deliver bad news to your employees, but there are so many factors at play that can sway the outcome. Your current work ecosystem can play a part, the current climate (i.e., after a crazy societal/political year + a pandemic), right down to your employee’s individual circumstances (perhaps they’re going through personal issues). 

When determining how to communicate bad news, use our above suggestions but make sure to tailor them to your unique workplace. 

Let’s face it: delivering bad news about benefits is never going to be something you look forward to. But with some pre-planning, honesty, employee feedback, and a proper year-round communication strategy you can make it sting less. (And maybe even avoid a backlash!)