ComPRehension

Professional development and training blog of the Public Relations Society of America (PRSA)
May 15, 2009

Reducing Employee Uncertainty When Benefits Get Cut


To weather today’s economic storm, many companies are implementing cost-saving measures that impact employee benefits, including pay cuts, forced vacations, suspended 401(k) matching contributions and frozen pension plans.

These actions don’t happen in a vacuum — and neither should communications about any benefit reductions, which are part of a company’s overall business strategy and financial plan to return to profitability or greater stability. While this is difficult workplace news, it’s another opportunity for us to address employee fears and clearly explain the rationale for these changes against the bigger business picture. Consider these ideas:

  • Share the anticipated cost savings. Put a dollar value to the cost-cutting measures to demonstrate the savings impact, as well as how it supports the company’s other fiscal decisions. For example, when A.H. Belo Corporation announced salary cuts, the CEO noted annual savings of about $10 million toward its cost reduction initiative.
  • Explain when benefits may be reinstated. No one has a crystal ball. But, if possible, share what workplace or financial changes need to happen before some benefits are restored (e.g., sustained profitability for several months). Provide regular progress updates to help employees know how their work is contributing to the return of some degree of workplace normalcy or financial solvency. 
  • Demonstrate top management “skin in the game.” Leaders who take personal, decisive steps to share in cost-cutting actions send an important, symbolic message to employees. JetBlue’s CEO took a 50 percent pay cut last year in a “show of solidarity with employees.” Liz Claiborne’s CEO flies coach, saying “every penny counts.” Sometimes it’s less about the money and more about modeling positive behaviors for the organization.

By Kelly Womer, APR, ABC, vice president, Linhart Public Relations, provides organizational communications, reputation management and other brand-building counsel to help drive business strategies and results. She has worked on the agency and client side for global Fortune 500 companies and other firms.

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