Management Tip: Hiding bad news demotivates employees, study finds

Withholding important information from staff is demotivating, regardless of whether the news is good or bad, according to a new study which suggests the quality and honesty of internal communication may be a crucial factor in engagement. 

Researchers from Warwick Business School asked participants to play a game of ‘dictator’. This involved one participant trying to motivate another to transfer them as much money as possible by giving them either £5 or £10, although the person being given the money in the first instance would not be aware of how much they had been given.

The person sending the money could then spend £1 to tell their partner whether they had been sent a higher or lower amount. The researchers found that people who had been given no indication as to whether they had been given £5 or £10 transferred on average 48 per cent less back to the other person than if they had been told they had only been given £5.

The researchers then varied the game so that the first person would know whether they had been given £5 or £10, but the amounts they transferred back were still 40 per cent lower if their partner decided not to tell them how much they were sending over – even though they already knew.

“People are not only motivated by money,” said Dr Leif Brandes, assistant professor of marketing and behavioural science at the University of Warwick. “Instead, informing them about relevant developments in the work environment can boost performance.”

Brandes warned that the experiment has parallels in real workplaces, because managers tend to have access to information before their reports and can decide whether to share or withhold it. “Many go for the latter, which demotivates staff,” he said. “Managers should take note: it is not uncommon for uninformed employees to eventually even leave the company, so sometimes bad news is better than none.”

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