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February 23, 2004

Don't Bungle Bad News

Posted by Carole Matthews at 4:22 PM

No company wants to share bad news with the public, but when you are forced to share it, remember the Adecco story from the January 20, 2004, issue of The Wall Street Journal by Carol Hymowitz.

Adecco SA made some grave mistakes when announcing bad news recently. The Swiss-based staffing firm announced it wouldn't be releasing year-end results on time and warned of "material weaknesses with internal controls" in its North American businesses in mid-January, without elaboration or even confirming the identity of legal counsel further investigating the situation. Not surprisingly, investors got spooked, dumped the stock, and, as a result, Adecco lost 35% of its market cap within hours of the announcement.

What should they have done? Here are a few suggestions from Hymowitz that any business getting ready to share bad news can use:

* The company should have been more forthcoming with information. In the current "scandal-tinged business climate," refusing to share information could smell like an admission of guilt.

* One leader should have been appointed to handle the crisis. Instead, Adecco shifted responsibility mid-crisis making communications confusing.

* Lastly, the company should have communicated more, not less, with investors, customers and employees.

Sharing bad news is never fun, but done the right way, it can make your company look a bit more conscientious even though it's made a mistake.