The question facing Edelman, the world's largest firm and founders of the eponymous Trust Barometer, is how to regain trust. In late March, global CEO Richard Edelman promised staff there’d be no coronavirus-related layoffs at the firm. Today, Edelman went back on that promise.
During a town hall, the company announced it’s laying off nearly 400 workers. Edelman has some 6,000 staff in 60 offices globally. In addition, Edelman is asking VPs and higher to take pay cuts of 5 to 20 percent.
It was a bold move for Richard Edelman to tell staff in March there would be no layoffs. CEOs in other industries made the same promise.
Own the Promise
Externally, the best route for Richard Edelman and the firm is to own the mistake. "This is the first priority," says Hinda Mitchell, founder of Inspire PR Group. Mr. Edelman's mistake was making the promise, not the layoffs.
People forgive companies for laying off staff during the pandemic, according to a survey from Clyde Group. In an April survey, 54 percent of consumers said they'd continue to do business with companies that furloughed or laid off workers during the pandemic.
Katie Paine, founder of Paine Publishing, agrees. "I think for most people it's just another layoff, one of thousands and more to come. I doubt if it hurts the brand much." More concerning, Paine says, is the negative coverage Edelman absorbed when it worked for controversial clients.
Other PR takeaways are straightforward:
- Avoid issuing bold predictions in public unless you're absolutely certain about them
- Never say never
- Avoid saying things to the media that eventually may be proven wrong
- When discussing financial matters, especially when they involve people's livelihoods, check yourself, then check and check again
Why It Happened
Internally, Edelman is following standard PR practice around layoffs. Edelman's father arguably wrote the book on PR. The first step is to explain why the layoffs occurred.
As you'd expect from someone as respected as Richard Edelman, this is what he's doing.
In a letter to staff following the town hall, Edelman wrote in detail and with transparency. In addition, his empathetic tone was exemplary, though he did not apologize for making the incorrect prediction. He apologized for the harm it's done, though. "You rightfully expect the unvarnished truth and to know the steps taken by leadership to weather the storm...Here is the full story of how we arrived at this point," he began. PRovoke PR published the letter.
All Options Taken
Every option was taken to "stave off this decision," Edelman wrote. These options included "reducing compensation for executives on our global operating committee by 15-20 percent, ending the use of freelancers, temporarily pausing our internship program...limiting external recruiting to only a handful of critical roles globally and slowing internal promotions."
Later, he noted, "As a family business with zero debt and cash reserves, this swift reduction of operating expenses allowed us to maintain staff levels and salaries until this point."
Still, the company "suffered a succession of body blows. This is a truly global recession. No office, market or region escaped its impact."
Treat Them Well
The next step with layoffs is to make sure those exiting are treated well. Remaining workers will notice. Says Mitchell, "This is critical to internal culture–demonstrating a commitment to do the right thing, even in the worst circumstances." The tone and content of Edelman's letter demonstrate that he agrees.
"We will do what is right for those who are leaving our company," Edelman writes. He lists 5 items to support employees, including career transition services, LinkedIn Learning and a $1,000 credit for personal technology, such as a laptop.
Addressing those "talented and wonderful" departing employees, he adds, "I am profoundly and deeply sorry. The thought of how this affects you and your loved ones has given me many sleepless nights. My gratitude to you is heartfelt, and you will be deeply missed by me, as well as your colleagues and friends."
In addition, the decision, he writes, "was gut wrenching, especially as I told you in March that we would have no job losses due to the pandemic...[it's] the most difficult [decision]...in my 23 years leading this firm."
In a case of strange timing, Edelman spoke June 1 about the importance of hiring minorities. Did he not know what he'd be announcing June 2?
Those Who Remain
PR practice around layoffs suggests reassuring employees who remain. As Edelman writes, "I continue to have deep confidence in our strategy...there has never been a more important time for a communications firm that can help business fulfill its role in healing our society."
Importantly, Edelman avoided making promises of employment. As Mitchell says, "Transparency–even when it means communicating the possibility of future bad news–still is the right approach."
Seth Arenstein is editor of PRNEWS, follow him @skarenstein
This article is part of PRNEWS' ongoing COVID-19 coverage.