Covid-19 is ravaging the global economy and presenting employers with unprecedented challenges. For Gravity chief executive Dan Price, that challenge was crushing: The company's revenue had essentially been cut in half. Price was now faced with a grave decision: lay off 20 percent of his employees or go bankrupt.

Price refused to accept either option. Instead, he decided to do something almost unheard of in today's business environment:

He asked his employees what to do.

"As a CEO, I don't believe in top-down decisions," Price said on Twitter. "I spent 40 hours talking with every employee about our finances and asked for ideas."

What followed was a master class in emotional intelligence--and a major lesson in how to run a business in the face of difficult challenges.

The backstory

A Seattle-based company, Gravity Payments helps small businesses around the U.S. to process payments. But as those small businesses' profits took a nosedive, so did Gravity's.

"Across all of our merchants, there was a 55 percent drop in revenue over the last month," Price recently told Fast Company. "That is a bigger decrease than during 9/11 and during the Great Recession." Since Gravity takes a small cut of merchants' sales, Price estimated his company would be bankrupt in four to six months.

Price, who made headlines in the past when he took a pay cut to increase his employees' minimum salary to $70,000, decided to take the problem to his people.

So on March 19, Price called a companywide meeting to let employees know the state of the business and solicit creative strategies for navigating the next few months. He and Gravity COO Tammi Kroll also scheduled 40 hourlong meetings with small groups of employees to check in and gather ideas. "We just put all our cards on the table," Price says. "And we listened."

Those meetings revealed some key insights. While everyone was willing to make a sacrifice if it meant keeping Gravity in business and avoiding layoffs, not every employee could afford to give up the same amount. Some had families or new mortgages, others had savings that could keep them going.

"Together, the Gravity team settled on an unconventional strategy," writes Shegran. "Each person was given a form that allowed them to privately express how much, if anything, they could sacrifice financially in terms of a pay cut."

According to Price, employees with higher earnings generally gave up more while lower-paid employees gave up less. But everyone in the company took a cut.

The lesson was simple, yet remarkable:

"CEOs: please, consider talking with your employees before laying them off," Price wrote on Twitter. "We lost half our $4 million monthly revenue & had four to six months until bankruptcy. When we told employees this, they volunteered pay cuts that will get us through eight to twelve months, with no layoffs."

Price's approach to dealing with his company's financial woes showed evidence of brilliant emotional intelligence--the ability to identify, understand, and manage emotions.

Here's what you can learn from it:

Be open and honest.

By openly sharing details about his company's finances, Price helped employees to understand how dire the situation was. Once this was clear, they were more willing to sacrifice to keep the business going.

Takeaway: If you're in a bad situation, hiding it won't help.

Instead of underestimating your people, trust them. The more information you can provide, the better they'll understand the situation and be willing to help.

Listen.

By listening openly to his people, Price learned key insights about how they felt about the situation and what they'd be willing to do. Notice also that Price and Kroll had multiple meetings--this allowed employees to fully process the situation and come back with thoughtful responses.

Takeaway: After you've presented the situation to your people, try to hold structured meetings with them, in small groups if possible. Then, listen carefully--without interrupting.

These meetings will reveal key insights about what your people are going through--and can inform decisions on how your company can realistically move forward.

Work together.

By allowing employees to help brainstorm the solution, Price eliminated some of the natural resistance that comes to big, unwanted adjustments (like cutting pay).

In other words, by tapping employees to find a solution to a difficult problem, Price simultaneously achieved buy-in for that solution.

Takeaway: Instead of trying to solve your company's problems yourself, give your people a chance to participate. This makes them feel less like the victim who is subject to the demands of their clueless employer, and more like a partner who's invested in making the solution work.

So, if you're an employer or business leader faced with difficult challenges right now, focus on doing these three things:

Be open and honest.

Listen.

Work together.