You're the captain, which means you're going down with the ship. It also means you need to lead your employees to dry land.
It's a fate no entrepreneur accepts easily: All signs seem to indicate a near-certain death for the company and you're doing down with the ship. But your job isn't over. It's in these tough moments when how you lead your employees matters most.
"Good management is good management," says Kim Cameron, a professor at Michigan's Stephen M. Ross School of Business and author of "Positive Leadership: Strategies for Extraordinary Performance." "Treating people well, helping them flourish, and unlocking potential are all good practices regardless of the environmental circumstances," he tells Amy Gallo, the contributing editor of the Harvard Business Review.
That doesn't mean, of course, that managing employees on a sinking ship is easy to do. Below, read Cameron's four principles for how to do it well.
Find a life preserver.
Don't lose your business savvy--continue to look for ways to turn around your failing business. Amy Edmondson, a professor at Harvard Business School and author of "Strategies for Learning from Failure," says there are a few things you should try before handing over the keys. "There is often a short window of opportunity to do something differently," Edmondson tells HBR. She suggests getting input from customer-facing employees and conducting small alternative business model experiments. "What kinds of products and services would customers welcome that we don't offer?" she says. Steer your company away from its failure and find a new way to revive it.
This is not the time to withhold information--be honest and authentic. "Whatever you know, share it with your employees," Cameron says. You have to be grounded in reality and tell your employees exactly what's going on, why the company is sinking, and how it happened. If you think you're protecting your employees by keeping them in the dark, you're wrong. If the staff finds out you're lying, they will not try to help and leave in droves. "Be as honest as you possibly can," Edmondson says.
Create a bigger purpose.
Reinforcing your company's goals, mission, and why statement will not work here--your company is dying. You need to find a larger purpose and motivate your employees to work towards something bigger than the company. Cameron suggests pushing your employees to "prove the critics wrong" or to learn a new skill that will help with a new job. If you're getting bought out, the new bosses may be looking for a leader--motivate your employees to be proud and turn a bad situation into an opportunity for their career.
At a time of uncertainty and failure, your employees will be scared, angry, and sad. You cannot ignore their emotions. "It only drives them underground and makes them more deeply felt," Edmondson says. "It's important to acknowledge feelings, especially negative ones." Listen to your employees, be there for them, and encourage group discussions without your presence. "The best practices I've seen are lots of huddles--people getting together and just having conversations about what's going on," Cameron says. But, if people are in serious mental anguish, refer them to an outside specialist.
WILL YAKOWICZ is a reporter at Inc. magazine. He has covered business, crime, and politics at Patch.com, and his work has been published in Tablet Magazine and The Brooklyn Paper. He lives in Brooklyn, New York. @WillYakowicz