You’re the CEO of a company whose sales are declining, and there is a 50/50 chance you will need to lay off some of your employees sometime in the next two to three months. You have to decide whether to tell them now so they can look for new jobs as soon as possible, even though you’re not yet sure layoffs will be necessary, or wait until you are sure layoffs will occur. If you don’t tell employees the company may need to downsize—and then you do lay off a large enough number of employees, it may become known (in the media, for example) that your company was aware of the problem three months ahead of time and did little or nothing to protect local residents (and now your former employees). Damage from a situation such as that could be not only economically costly, but could affect the company’s reputation. On the other hand, if you do tell employees there is a threat of layoffs, you may lose some of your best workers who jump ship just in case. You are the CEO—and you have this decision to make today.
