I think it's helpful to have an honest management team. Employees aren't stupid; they can tell when their boss is spinning a tale or trying to hide something. They also want their concerns to be taken seriously, even if the outcome isn't what they actually want.
When I was out of college, I worked for a company in Florida. The pay was ridiculously low, and the big boss (who drove a luxury car and lived in a nice home) would tell us, "You're being paid in sunshine." Well, the landlord didn't accept payment in the form of sunshine, you know? My immediate supervisor, though, fought for every penny in a raise and told us look, this was never going to be a high paying job, but use it for the experience and enjoy the location and move on when it was time. I imagine a lot of people stuck around longer than expected because they were treated like intelligent adults by their direct supervisor.