When a company is in the throes of layoffs, the internal communications process can get muddied when a company seeks to satisfy Wall Street more than its employees.
If employees learn that jobs will be cut but don't know immediately if they'll be on the cutting room floor, then an internal backlash can ensue. And the public may take note.
For example, telecom giant Ameritech [AIT] announced on April 14 that it is eliminating about 5,000 jobs. The Chicago-based company has had to buffer itself against increasing competition in a volatile market. The job cuts were discussed, but not detailed, as part of a $3 billion cost-cutting initiative at the company's recent annual meeting a day later.
The Ameritech case has several ingredients that can make layoffs an extremely difficult process for PR executives to manage:
- uncertainty about who's going and when;
- evasiveness about how the layoffs will make the company more financially sound; and
- a diversified business that makes internal communications even more unwieldy.
Ameritech doesn't want to tip off its competition about future business plans. However, 13,000 Chicago-based workers at Ameritech Cellular and Security Link from Ameritech, both business units of the company, are waiting to hear if they'll have jobs next year.
"We are sensitive to the concerns of our employees... [But] we know that the cuts will happen, but we don't yet know if it will be employee A or employee B who will end up going," says Richard Cieslak, Ameritech's director of corporate communications.
Tips for Pink Slip Blues
When restructuring, companies can use several methods to control the image tailspin that layoffs can create. Quick and decisive communication, employee bonuses, rumor hotlines and retraining/placement services all will contribute to a better transition.
To manage the PR, companies should divulge specifics about how the layoffs will affect employees and offer financial bonuses for key employees the company wants to retain, says Neal Lenarsky, who heads the Los Angeles-based out-placement firm Strategic Transitions, Inc.
"Great companies will have tremendous PR throughout a process like this," he adds. "They will search out information everywhere and anywhere to find out how the layoffs are being perceived...The trust in the company is being diminished and you've got to tell employees what the next step will be and communicate what severance packages you're giving employees."
AT&T [T] and Netscape [NSCP] also have announced recent restructurings. And from the PR corner, these companies may represent a better method to communicate and initiate streamlining.
For example, AT&T avoided an immediate backlash recently when laying off 15,000 by organizing a progressive employee communications program involving its intranet, toll-free information numbers, the Web and closed-circuit TV (see PRN, 3/2/98).
Netscape also is getting positive PR from news that its CEO Jim Barksdale is paying his own travel expenses while the corporation is experiencing financial tremors.
On a positive note, Ameritech is addressing queries from employees through hotlines and e-mail. And employees were told about the cuts through teleconference calls from business-unit leaders and one-one-one conversations with supervisors while financial analysts and the press were also being told.
Poor Morale Can Equal Poor Earnings
The residuals of a layoff are long-term and can sap a company's reputation on a very personal level. Disgruntled employees might talk to many others outside the company and can damage a company financially.
This past October, Wade Hyde was laid off from Blockbuster Entertainment Group, Dallas, where he served as a trade media relations liaison and a member of an internal PR team of about 14. He's since found a position as VP of marketing and PR for Remington-Hall Capital Corp., a diversified real estate investment firm in Dallas.
Hyde says he was one of about a dozen PR pros let go after the new corporate communications VP took over. His severance included two months salary and he signed a nondisclosure agreement. However he says, from the PR side, it was disconcerting that the company didn't present a clear picture of what would transpire.
Blockbuster's cuts of about 100 employees were linked to poor earnings and parent company Viacom's [VIA] June hiring of CEO, John Antioco, in hopes that he would improve the company. Management changes included hiring a new VP of corporate communications, Karen Raskopf.
"It wasn't that they lied to us - they just weren't forthright," recalls Hyde. "When Antioco came in, he inferred that there would be no layoffs and then a couple weeks later, we were told there would be some removals, but we weren't given definitive timelines. We were given ambiguous timelines. One day, we'd see a team of human resources personnel come into a department and then people would be told."
Acting reasonably, yet quickly, with employees is key to keeping your company's bottom line steady.
"It might satisfy Wall Street to learn how many positions are being eliminated, but you need to let employees know who's staying and who's leaving as soon as you can so you can help employees cope," says Bill Catlette, co-author of the new book, "Contented Cows Give Better Milk," published by Saltillo, 1998, $30. (http://www.contentedcows.com) The book ties contented workers with the bottom line. "The chief difference between a company that treats people right and one that doesn't is that people are committed, cared about and enabled through training, tools and trust," adds Catlette. Thus, the company stands a better chance to increase profits. (Ameritech, 312/750-5027; Strategic Transitions, 818/227-5024; Bill Catlette, 901/853-9646; Wade Hyde, 214/749-4600)