Since September 11, half a million Americans have lost their jobs.
The PR challenge for companies cutting staff is to show compassion, and
follow through on offers of help, as well as preserve their reputation.
Julia Hood reports.
The downturn in the economy, exacerbated by the September 11 terrorist
attacks, has led to the biggest jump in the unemployment rate in five
years, now at 5.4%. About 415,000 people lost their jobs after the
attacks, an estimated 100,000 of those from the airline and travel
The way in which a company handles job reductions can have a significant
impact on its reputation, its share price, and its ongoing ability to
recruit and retain good staff. And that presents a huge challenge for
According to a joint survey by Andersen and Vault, a botched layoff can
damage a company's brand. The study, released earlier this month,
examines the attitudes of 1,200 former employees. "We fully expected
them to be unhappy," says Chris Ryan, senior manager in Andersen's human
capital practice. "But what was stunning to us was the amount of
documented carelessness that some of these people had been exposed to as
part of the layoff practice."
The survey reveals that 67% of those asked wouldn't work at the same
company again, while 49% said their layoff was handled in a way
"inconsistent with the company's values." Because of this, 54% said they
would not recommend the company's products or services to others.
But it doesn't have to be that way. News of recent cuts at Merrill Lynch
sent many employees to internet chat rooms, but not all their comments
were negative. "I love ML," writes one gleeful ex-staffer. "I'm going to
grad school this September, and don't have to do a damn thing till then.
Aruba, here I come! Corporate America rocks!"
About 66,000 employees at the financial giant were offered "voluntary
separation" in exchange for up to one year's salary and a percentage of
their 2000 bonus. The company's share price rose $1.30 to $45 the day the news broke, and is now hovering around $50.
So, how can a company best cut staff without damaging its brand? It
comes down to targeting constituencies effectively.
When planning for a job reduction, it's important to identify which
stakeholders need to be notified, and what key messages will reach them.
Richards Badmington, VP of Cornerstone, a Baltimore marketing
communications firm, recommends drawing up a list of stakeholders from
the start: "Put alongside it a really simple hierarchy of issues that
are most important to those key audiences," he says.
The most important constituency is employees, both those staying and
leaving. "You should let each employee know one on one, and it shouldn't
just be the HR person calling them into a room and saying, 'Sorry, we
have to let you go,'" says Jennifer Kissell, VP of organizational
development for Edelman's Western region. "You've got to hear that from
Kissell also says that while employees want to hear that the layoff
isn't personal, there's no reason to go into the nitty gritty of the
business challenges the company faces. "They no longer have a reason to
care," she says. "You need to, as much as you can, think about what you
would be concerned about if you were on the other side of the desk."
Some companies offer recruitment services, the use of office space, or
other programs. While such kindness may be appreciated, Andersen's
survey found that this may have little impact on the feelings a person
has about a company after a layoff. Some companies have found that
maintaining an alumni service allowing former employees to keep in touch
through a special chat room is popular.
Remaining staffers need to be reassured, but without promises of job
security that might strain credulity. "You need to communicate honestly
and constantly," Kissell says. "People don't get upset about bad news as
much as they do about lack of news and rumors."
The most important rule is that employees must be told before the news
is public. It's not always easy: Boeing learned that when it announced
20,000-plus layoffs in September. "Before we even knew the percentage of
those being laid off, we were sitting there watching some folks on TV
talking about it and giving numbers," says Tom Ryan, PR manager at the
company. "That night, we knew we had to set the record straight."
The only way to manage the problem is to prepare a leak contingency plan
early on. That way, if news gets out, the company is ready to answer
employee and media questions properly.
The business press and market analysts may not react favorably to news
of job cuts, but PR21 has found that a heads-up to certain audiences is
the best way to thwart negative coverage. When client Tantivy
Communications, a Florida-based wireless tech company, laid off 25
people this year, PR21 held pre-briefings with selected analysts and
media, and made the CEO available for questions.
The key message for Tantivy was the business plan, and how the layoffs
were directly related to the company's plan for success. "It was
important to position them for the long term, not just make an
announcement about laying off X number of employees," says Christy
Frederick, VP at PR21.
As a result, the coverage focused on Tantivy's business strategy in the
context of the layoffs, not as counter to the layoffs.
Perhaps the most important thing to remember with any layoff is that the
promises you make will be held against you if you fail to keep them.
"People follow through on the messages that the company puts into the
market at the time of a layoff," Badmington says. "If you say you're
going to do something, be prepared to pay off on that promise with
messages that don't create a slippery slope."
1. Do make sure each employee is told in person, by his or her own
manager, and given a full explanation of any severance or other
2. Do keep track of all the documents related to the layoffs. This will
prevent possible leaks, and will ensure that all communications are
3. Do prepare for the worst-case scenario, without being obvious about
it. Some laid-off employees may become very upset or even violent. Have
a manager available to step in and defuse problems
1. Don't forget that employees are always the most important
stakeholders in any layoff situation
2. Don't be complacent about containing the news. Prepare a leak
contingency plan, in case the media reports the layoffs before you are
3. Don't ignore the law. Make sure that you know and understand the
federal and state regulations regarding layoffs in your area. In certain
cases, the company may need to file a report with the Department of