An annotated guide on how not to break bad news

In one letter to staff, the CEO of Sanjel announced the company’s bankruptcy, the sale of two divisions and his own resignation

 
An oil derrick belonging to Husky Energy, silhouetted against looming clouds
Storm clouds gathering… (Larry MacDougal/CP)

On April 4, Calgary-based Sanjel Corp. became one of the biggest casualties yet of the oil crash. In a letter to some 2,000 remaining employees (down from 4,300 in 2014), CEO Darin MacDonald announced the family-owned oilfield services company was entering creditor protection and selling two divisions—along with his own resignation.

We asked Alyn Edwards, a partner with Vancouver-based Peak Communicators and a veteran crisis communications manager who has been involved in staff reduction programs in a variety of industries, to deconstruct the missive.


April 4, 2016

To all Sanjel, Suretech and Terracor Employees,

 

Since late 2014 the energy industry has weathered unprecedented reductions in drilling and completions activity. E&P companies have placed tremendous pressure on the service sector to continually reduce the cost of services to a point of breakeven or below. Despite Sanjel’s proactive approach to expense management and aligning our operations to current levels of market activity, it has become increasingly difficult for us to maintain a strong balance sheet.

Edwards says: The first paragraph confirms the obvious: The company earnings no longer support its operations. The delivery of factual information is common and acceptable from a company CEO as an employee update.

To address our financial position, Sanjel has accepted two separate sales agreements that will provide a foundation for our business continuance in the North American energy industry. Sanjel’s Canadian pressure pumping business will be acquired by STEP Energy Services Ltd. Concurrently, Sanjel’s US pressure pumping business will be acquired by Liberty Oilfield Services Holdings LLC. We are actively seeking buyers for our subsidiary companies Suretech Completions and Terracor Group.

Edwards says: The second paragraph says two of the company’s main enterprises have been sold and other subsidiaries are being offered for sale. This is where the letter gets quite cold and becomes unacceptable as notification for employees of a change in their employment status. What workers really care about is job security and proper notice if there is to be a change. This isn’t proper notice and will cause much more anxiety than is necessary. Employees of these subsidiaries are now thinking they have lost their jobs. It gets worse...

To facilitate the closing of these two sales agreements, Sanjel Corporation (including Suretech Completions and Terracor Group) initiated a Court-supervised restructuring process. On April 4, 2016, Sanjel obtained a Court Order from the Court of Queen’s Bench of Alberta under the Companies’ Creditors Arrangement Act (CCAA) in Canada. Sanjel also applied for recognition of the Initial Order under Chapter 15 of the US Bankruptcy Code. PricewaterhouseCoopers Inc. has been appointed Monitor of Sanjel during this process. It is our intent to provide uninterrupted service to our clients throughout the restructuring process.

Edwards says: Paragraph three details how two other subsidiaries are now undergoing court-supervised restructuring and are under bankruptcy protection. Instead of giving information on the future of employees, it says the company intends to provide uninterrupted service to its clients.

Paul Crilly has been appointed to the role of Chief Restructuring Officer. Paul will oversee the Sanjel portion of the restructuring process and work closely with PricewaterhouseCoopers to close the transactions and complete the CCAA/Chapter 15 process.

Edwards says: Further delaying any comfort to the staff to whom the letter is addressed, paragraph four deals with a new restructuring officer and how the receiver will complete the sale of subsidiaries under the bankruptcy process.

While I expect that this message will cause uneasiness, details regarding the transition plan will be broadly communicated once the transaction details have been finalized. It is anticipated that completion of the two transactions will occur within the next 30 to 60 days. No changes are anticipated to employee benefit programs during the restructuring process.

Edwards says: A classic understatement leads off paragraph five: “I expect that this message will cause uneasiness.” Although he promises more information as transaction details are finalized, the CEO says employees will be left hanging for up to 60 days. The vague suggestion that some current employees could find positions with the new entities while, at the same time, asking employees to stay committed and focused comes so far down in the letter as to appear insincere.

Your ongoing commitment and ability to remain focused during this restructuring process will increase our ability to successfully close the pending transactions and position them to move forward in the energy service industry for the long-term. I am optimistic that many of you will have the opportunity to continue to build your career with one of the new entities, each of whom will be creating their own transition plans including employee requirements.

 

Further to the messages above, I also want to announce my resignation as President and Chief Executive Officer. This company and the people in it have been a huge part of my life and my family’s for over 34 years. I am incredibly humbled to have had the opportunity to work with such an amazing team. While this is not necessarily how I envisioned the future to unfold, I want to personally thank all members of team Sanjel past and present for their dedication, hard work and overall commitment to ‘Pride by Performance.’

Edwards says: Putting the final nail in the coffin is the CEO’s announcement that he is resigning—which is to say he will no longer be around to defend their interests. This is a brutal way to notify employees of changes and far from accepted practice. A better way would be informing managers first and then line employees with managers present. Appropriate time for questions with well thought-out responses would give employees personal contact with full and accurate information along with some comfort. The employees of this company deserved better.

Sincerely,
Darin MacDonald President & Chief Executive Officer

 


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