A boss has to be open and above-board with employees. He or she also should have clear expectations so people know how to present ideas and projects that will meet the company's needs and the boss's expectations.
If there are layoff or salary cut rumors, a boss needs to address these truthfully, and as soon as possible, even if it's just to say, "I haven't heard anything, but when I do, I will let you know." This tells the employees the boss is at least listening to their concerns. A boss always needs to keep in mind that his or her employees are human beings with lives and families, and may depend on that job to feed their families. Remember that, and acting accordingly, will go a long way toward building up respect in the office.