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How to discuss budget cuts at work

No one likes bad news. Even worse if you are the one that has to share it and implement it.

Tough decisions are part of being a manager. Cost reductions and having to re-organize or reduce staff are some of the most difficult tasks managers face in their jobs.

Depending on how your company is doing, your budget for the department may be the same or more than it was, the year prior. However, you could be dealing with budget cuts and targets like reviewing spending.

As we move toward the end of the calendar year, and prepare for next year's budgets, here is how to get through difficult conversations on budget cuts with your staff; 

#1 Give clear and concise facts

Don't try to sugar coat bad news, or drag it out. This disrespects your team's integrity. Your staff needs to know exactly what the facts are in a clear way that they can more easily process them. Give them the information they need to know in a way that is simple, direct and matter-of-fact.

#2 Remain calm and polite

As the manager, you are the role model for your staff and set the standard. Do not try to earn credits by siding with your team or being negative about the news. Always stay diplomatic and honor the organization.

Show the team that you are not phased by the news, and that you are ready to move forward from this unfortunate news, with steady calm control.

#3 Manage Expectations

Indicate the reaction that you expect from your team. Show understanding and encouragement; let them know that you realize that this news is disappointing for all. However that you do expect a "can-do" mentality. Encourage your staff to keep a constructive attitude.

Help them process this news with information that can help them deal with what is ahead. Inform the team as much as possible on:

  • what they can expect in the coming time
  • what the budget cuts mean for them and the department or organization
  • what is expected of them during the budget cuts
  • what will be rewarded (helpful suggestions) and frown upon (rumor spreading)

#4 Manage Fear. Keep Communication Open

When going through a time of cut-backs and layoffs, there can be a lot of negative and false information spreading. For your staff, their job is important to them. Insecure times like reorganization and budget cuts make individuals feel insecure and afraid. With good reason.

Maintain a high and consistent level of transparency and communication with your staff, as a team and in individual conversations. Keeping feedback channels open will reduce the rumors, misinformation, gossip, lies, fear and inaccuracies in communication that come along with uncertain times.

#5 Document Agreements and Conversations

To avoid misunderstanding and misrepresentation of facts, make sure to record conversations, take notes, and have a third party in the room during difficult conversations with people. The administration of communication during difficult times like layoffs or reorganization will help defend you against lawsuits, claims, bad publicity, and other events that are more common in stressful times.

#6 Remember to take care of yourself

Budget cuts and other difficult matters affect you as a manager too. Not only are you dealing with your own disappointment, but you are dealing with your staff as well.

Stress relief and keeping yourself in the best condition to cope will help you make better decisions and cope with negative situations better. Equip yourself to deal by reducing your stress levels and maintaining your stamina. These tips will help you;

  • Have a support network of people whom you can talk to and truly confide in, both outside of work and at the office
  • Eat nutritiously, Exercise enough, and Get enough restful sleep

You'll need to do this to keep up your energy.

What about you?

Have you had to deal with a budget cut? How did you cope? When you have a few moments now that you've read, we would like to hear from you on your thoughts. Share in the section below.



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