The leadership test no one wants: delivering bad news well

Nov. 17, 2025 - MIT Sloan Management Review

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When terrible things happen in an organization — a partnership ends in disaster, expenses outpace income by a mile, or outside economic forces throw progress way off course — employees look to leaders to explain what’s going on. Good communication requires leaders to determine what happened and what comes next. They can start by articulating the answers to two questions: Where does responsibility for the problem lie? And is the situation salvageable?

When delivering bad news, its origin story matters. Sometimes the problem is self-inflicted, through decisions, execution gaps, or strategy errors inside the organization. Other times the force is external, through market shifts, supply shocks, or technology waves. Together, these two dimensions create four kinds of leadership moments. Let’s take a look at them.

If you can name which moment you are in, you can communicate with clarity.

1. The 'Fix It' Message

This is the message to use when your own organization created the situation that has gone south, but the situation can be solved. It’s tempting to hide when you suffer a self-inflicted wound, but your credibility starts with owning the problem.

2. The ‘Bounce Back’ Message

External shocks, such as fluctuating tariffs, supply breakdowns, and sudden regulatory changes, demand steadiness. The leadership voice should be calm, specific, and supportive. People want to know how the company will adapt operations, what flexibility they will have, and how success will be measured while conditions remain volatile.

3. The ‘Shut It Down’ Message

Sometimes the right decision is an ending. That requires honoring the work, unearthing the learning, and spelling out where people, budgets, and valuable assets will go next. Closure prevents zombie projects from consuming attention and allows talent to reattach to meaningful work.

4. The ‘Move On’ Message

When the world changes in ways that make the usual path untenable, the leadership job is to help people release the past and attach hope to the future. Endings in this circumstance require more than a memo; they benefit from symbols and ceremonies that put the changes in a broader context and make the transition feel real.

Regardless of whether leaders must fix or finish, and regardless of which of the four message types they deliver, there are basics that should be included in every message. Employees and team members need to hear empathy, appreciation, disclosure, and some element of persuasion.

Bad news may end a chapter, but it can also concentrate energy. Leaders who master how to say the hard thing, at the right time, with the right words, free their organizations to do the next big thing.

ABOUT THE AUTHOR

Nancy Duarte is CEO of Duarte Inc., a communication company in the Silicon Valley. She’s the author of six books, including DataStory: Explain Data and Inspire Action Through Story (Ideapress Publishing, 2019

Read the full article here.