Reporting Bad News to the Client

    Fresh off of the last podcast on reporting status to the client, we thought we would delve in a little deeper with the concept of reporting bad news to the client.  There are definitely some dos and don’ts involved with this delicate situation and we will explain it from several vantage points.BadNews1

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    1. What are some of aspects of breaking bad news that needs to be considered that are different from simply reporting status?
      1. You want to reveal bad news the earlier the better.  I’ve heard of people who wait until a planned meeting like a weekly status meeting with the client management.
      2. Then they drop a bomb like the project is going to be delayed. Not only did you hold onto critical information.  But you also surprised them in a status meeting.
      3. I think that’s the second biggest rule is no surprises.  When you spring that on them in the status meeting, perhaps with other executives or other employees present, they have to react to this news in front of them.
      4. I’ve never met an executive that liked being surprised in an environment like that.  So I would recommend that if you’re going to report any type of bad news like a project delay, you give all of the executives involved some heads up so they can be prepared for it and perhaps even have a response for it in the meeting.
      5. One other consideration for giving bad news to a client is diplomacy. When you tell them, you definitely don’t want to sugar coat it, but you want to make sure you present it in a non accusative way.  Especially if the bad news was caused by one of their team members.
      6. You need to be careful to give them information on the situation and how you recommend going forward.  Whether it was caused by someone from your own firm or a client employee, the focus should be on moving forward rather than passing blame.
      7. The goal is not to throw someone under the bus.
    2. Sometimes bad news can’t help but be a surprise.  How do you deal with those sudden situations?
      1. Well it’s true that anytime you give an executive bad news, it may surprise them.  On the topic of not surprising them in a meeting, even if you hear something right before a big meeting, I would try to either head the executive off before hand to warn them, even if it’s a hallway conversation prior to the meeting.
      2. You also should be able to give an executive a heads up through your risk analysis.  If there is a chance of something going wrong, you should have a risk open for it and have some idea how you’ll deal with it through your risk mitigation plans.
      3. But you can’t think of everything that could possibly go wrong.  That’s one reason that I recommend reviewing possible risks on a regular basis.  You can think of a lot of risks early on at the beginning of the project.  But if you consider risks regularly, you’re more apt to think of additional things that may cause problems.
      4. Then you can increase your chances of being able to give a client executive the heads up of the possibility of something going wrong.
      5. Outside of that, I think the key is not to surprise an executive in a meeting.  Find them alone and hopefully in a situation where you have time to discuss the issue so that you’re not rushed.  It’s also best to approach them with some possible alternatives for how to correct the situation.
      6. That shows that you’re not just running to them with problems, but also have thought of some solutions.  Even if they don’t take the solution options, it shows you’ve thought about it and some of your ideas may give them an idea for something they will like.
      7. The advantage of giving them the heads up prior to the status meeting, is that when you do report it in the status meeting to the larger group, you can potentially have the resolution to present to them at the same time.  The executive will be on board with it.  It makes you look better and it makes the executive look better.
    3. What’s the worse bad news you’ve had to report and how did you deal with it?
      1. I was on a project once in healthcare consulting where the person we had managing the project was failing miserably.  He was in way over his head and he didn’t even know it.
      2. He reported the project as green on a weekly basis.  And he wasn’t just trying to cover up the fact that we were behind.  He didn’t realize how bad things were.  He had fooled himself more than anyone on the project.
      3. I was only in a support role on that project at the time.  I remember the firm’s management coming in to talk to the team and talking to each individual on the project to find out where we stood and what the true status was.
      4. After they had talked to a couple of key people, they realized that we were in much worse shape than the project manager had been reporting.
      5. They found another project manager within our company, one of our best, and prepped him on the project as much as they could.
      6. They released the first project manager from his responsibilities and then went into the client executive’s office.
      7. They explained the state of the project, told him that they had let the first project manager go and offered this new one to them.  That was important because we didn’t say, ‘this is your guy’. We offered him to them to interview and approve.
      8. As part of the interview process, the new project manager presented to him what he knew about the project, the plan he had in mind to turn things around and what he thought it would take in terms of cost and time.
      9. Our firm agreed to provide the additional hours that it would take for our team for free to assist in turning the project around.
      10. Also as part of the turnaround plan, our firm’s president would fly in every other week from New York to attend the weekly status meetings to learn firsthand how things were going and to allow the client face-to-face access to him for any issues.
      11. The client accepted the new project manager and his new plan, which included a fairly large revamp of our own team.
      12. We learned later that we were dangerously close to getting kicked out of that client because of how badly things had gone without the client knowing.
      13. But because of how we reported that bad news to them and how we went about fixing it at the same time we were reporting it, we essentially preempted their ability to come down on us too badly.
    4. How do you get your own firm’s management involved for reporting bad news to the client?
      1. As much as I’m a proponent of being honest and transparent with the client, in most cases, I advocate working with the management of your firm to make sure you’ve got your messaging correct.
      2. Even in my position as a project manager, I’m in charge of the project and the first line of communication with the client.
      3. But if I’ve got bad news to present to the client, I usually work with the management of my firm to, at the very minimum, give them a heads up on it.
      4. We may discuss the most diplomatic way to present it or brainstorm about the possible options.  Other times they just thank me for letting them know and tell me to let them know how it goes.
      5. One of the little benefits of that is, if the client manager calls them after I talk to them, they aren’t surprised.  You don’t want to surprise your manager any more than you want to surprise your client.
      6. Keeping them in the loop keeps them from being surprised, but it also gives you a good sounding board for how to address the client and which options you want to present to them.
      7. The management at your firm may want to be with you to present the bad news.  I’m not always a big fan of this approach.  The higher the rank of firm management that attends, the worse your client is bound to think the problem is.
      8. Going back to my example where the president of our firm came to the meeting, the client knew well how important it was as soon as he walked in.
      9. You just want to make sure the rank is appropriate to the problem or you risk them making a bigger deal out of it than it needs to be.
    5. What kind of ramifications will you face with bad news?
      1. Depending on the nature of the bad news and the mood of the client, it can vary. As I mentioned in the example before, we very nearly got kicked out of that client.
      2. That’s a very extreme situation because it can be very costly.  If a firm has invested a lot of time and money with a firm, they may require them to stay and fix whatever problem has been caused, even if they have to do it for free.
      3. The only time a client will kick the entire firm out is if they feel the need to cut their losses, do away with any sunk costs they’ve had to date and are just willing to start all over with another firm.
      4. That makes the client manage who selected the firm look bad, so most companies will try to do whatever they can to salvage the project.
      5. I think the bigger issue is that the client may ask a key individual or individuals to be replaced.  It’s often the project manager but there can be other team members that the client thinks are ineffective.
      6. In the example I explained before, we had an ineffective project manager, but there were business analysts and some developers that the client didn’t think were at the right level of expertise.  So the firm agreed to replace them.
      7. Other ramifications include the expectation of free or unbilled hours.  If the firm is at fault for a project delay, it seems unfair to the client that they should pay extra for the time the firm spends fixing the problem.
      8. Ultimately, if the firm does a poor job of winning the client back, the ramification is that you lose that client after that project.  Sometimes giving the client bad news is a huge opportunity.  You have the chance to show them how you can roll up your sleeves and fly the phoenix out of the fire.
      9. And if you’re able to do that, you may win that client back and develop a great loyalty from them.
      10. But if you just limp the project across the finish line and barely get things back on track, they may not be willing to take a chance on you for another project.
      11. As a consultant, you want to continue getting larger and more mission-critical projects from the client.  If they don’t call you back or only give you very small low-risk projects, you’re not being successful there.
    6. Have you ever hidden bad news from a client?
      1. I’ve never hidden bad news intentionally. But I have had a problem that was kind of lurking out there where I didn’t realize the risk.  I would report the project at a green status.
      2. Then something would come out of nowhere and the project is red.  You want to report projects as yellow to give them a heads up.  But if you go from green one week to red the next, they start wondering how you didn’t see this coming.
      3. Sometimes there are risks that I should have foreseen but didn’t.  And that’s what risk analysis is all about.  So sometimes when that happens, they may accuse you of hiding issues hoping they would go away.
      4. I have heard of project managers that try to sweep things under the rug, hoping that bad news will just go away.  Every once in a while, an issue gets resolved before becoming too big, but more often than not, you get burned by hiding any information from the client.
    7. Any final thoughts on reporting bad news to the client?
      1. Reporting bad news, no matter what the situation, is no fun.  It can be a bit scary reporting it to your client.
      2. Whether it’s the fault of your firm or of someone at the client, or no one’s fault, you want to make sure you’re honest and forthcoming.  State to them in clear terms what the problem is.
      3. Then have a couple of options for a solution.  That allows you to put a bit of a positive spin on the situation and start directing the conversation to how to resolve the problem rather than focusing on the actual problem.

    Next week’s topic: Should I Specialize or Generalize?

    Recommended Books:

    Confrontational Communication: Delivering Negative Feedback, Bad News, and Other Straight Talk

    Consulting 101: 101 Tips for Success in Consulting

    Consulting 101: 101 Tips for Success in Consulting

    Consulting 101 provides you with 101 useful tips to optimize your professional performance and jump-start your consulting career with success.

    2 thoughts on “Reporting Bad News to the Client

    1. Hi Lew,
      Excellent post – would you be interested in republishing this post on PM Hut, where many project managers will benefit from it? (I’m sure that many project managers out there want to deliver bad news but don’t know how).

    2. LinkedIn Discussion – Independent Consultants Support Group –

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