They know when things are going bad and there might need to be layoffs. Trying to smooth it over too much, as opposed to being honest, won't work. People appreciate being told the reality. Mr. Slayton makes sure he includes his top officers in major decisions. That causes an implosion.
Rumors get started, nobody knows what's going on.
In hard times, he says, you have to communicate just as much as in good times, if not more. The fear level is palpable. And when company layoffs and extinctions are the prime sources of conversation and gossip, it's hard to keep workers focused and productive. Don't make promises you can't keep. It's tempting to promise employees that there won't be layoffs, but if that isn't the reality, it will destroy your credibility with them and their loyalty to you.