Closing a Business – 7 Things to Communicate to Employees

by on October 10, 2012

According to the Huffington Post, more than 170,000 small businesses closed in the United States between 2008 and 2010. These numbers are staggering and I can’t help but wonder how things were handled behind the scenes and how the news of these business closures were communicated to employees.

When a business owner makes the difficult decision to close their business, there can be a temptation to just announce it to the employees before thinking through those things that might be important to staff.  As difficult as it is for a business owner to come to terms with the end of an era, it can also be devastating news for employees to hear.  Taking the time to think through those things that are important to employees, and developing a structured communication plan, can help provide for a smooth transition and possibly minimize the impact it will have on employees.

7  Things Employees Want to Know

1. Why was it decided to go out of business?

The best way to start a conversation like this is to explain where the organization has been, by providing a historical overview that led to the decision to close the business.  For example, I started this business 15 years ago with a goal to do X.  We had many years of success and the journey has been great.  In the last X months, I’ve come to realize that X.  Explaining your heart behind the decision makes you a little more vulnerable and elicits empathy from the employees.

2. When will the business closing be effective?

Employees need to know when the last day for business will be and how they should be planning their last few weeks or months on the job.  Understanding the timeline for going out of business, helps employees mentally process the news.

3. What changes will there be during the transition?

Think through any operational changes that might need to take place, so employees can mentally prepare to help close the business.  For example, will cleaning out files, computer hard drives or warehouse be part of the business closing process?

4. What should we tell our customers?

News of a business closing spreads like wildfire so be sure to write a script and instruct employees what to say and what not to say to customers.  But most importantly tell them why you feel certain information should be shared and why it is important to not share other information.  If your business relies on customer revenues until you close the door, that last thing you need is customers disappearing before you’re ready.  Prepare a formal Press Release so you can control what is communicated on news wires.

5 Will I be paid for unused benefits?

You should do an inventory of your employee benefits and determine how they will be finalized.  For example, how will you handle unused paid time off, how will health insurance be handled, tuition reimbursement, etc.

6. Will you help me find a job?

Let employees know if there are things you can do to help them find other work.  Offer to write letters of recommendations for your strong performers and contact other business owners in your niche to see if they have openings for your best employees.  Provide a list of similar businesses for employees to contact.  The more you can do to equip your employees to find another job, the less freaked out they will be over this transition.

7. What will happen to the facility and its contents?

Share your plan for the facility and its product and contents.  For example will you be selling furniture and equipment?  Will employees have the option to purchase anything?  What will happen to leftover product and equipment?  Offering equipment, furniture or product to employees at a deep discount can be perceived as a parting perk!

Things to think about when delivering the news.

  • Remember that you will be sharing life altering information to employees, so be sensitive to how this may rock their world.
  • Take the time to write out talking points for the announcement. This will help you communicate in a logical order and will help to make sure you remember to say everything you need to say.
  • Practice saying the words.  It is one thing to think a thought but a very different thing speaking the actual words. The more you practice, the easier, and less emotional it will be in the delivery of the message.
  • Make a copy of the information that is shared for the employees to take home. They will most likely be a little numb from the announcement and may forget some of the detail.
  • Communicate each point slowly, and pause in between communication points.  This will allow the employees time to absorb what you are saying.  If you’ve ever been on the receiving end of this type of communication, you understand that sometimes the words are difficult to absorb.
  • Tell the employees that you will take questions after you present all of the pre-scripted information.  This will allow you to answer questions before they are asked. This will communicate to the employees that you have already thought of their concerns and have addressed them as best as you can.
  • Lastly, be sensitive to emotional responses and allow time for those that need a moment of tears.

Being in the position of closing a business is never easy.  There are many logistical details that need to be considered, organized and strategized. But, taking the time to think through how this business closing will impact employees, and help address issues that concern them, can reduce the stress associated with this type of difficult transition.

photo by:  treevas

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