Who: PacifiCare Health Systems acquired FHP on Feb. 14, 1997, and announces potential layoffs of 900 employees.
When: First round of layoffs involving 700 employees occured in February, the second round involved 300 employees and was announced Jan. 5, 1998.
Total PR/Marketers: Approximately eight community affairs professionals and three marketing/PR professionals were laid off who worked for FHP. The marketing budget has been cut by 20%
Effect on PR/Marketing: From the outset, PacifiCare took an upfront stance to reporting the layoffs and included the employee reduction projections in its press release about the FHP acquisition. "The litmus test for our department was determining the right thing to do while facing earnings difficulties," said Susan White Simon, PacifiCare's PR manager.
Most of the layoffs were due to attrition and overlapping operations and affected marketing, sales and administration. The staff reductions included 450 positions lost to attrition throughout the company's 16 markets and 400 FHP employees terminations in California and Texas.
M&A Campaign: For PacifiCare, the the internal communications focus was on getting the word out about impending layoffs to employees with as much lead time as possible (six months) and controlling the messages to its other key audiences of physicians and investors. Employees were told that in situations where there were two people at the same level, the PacifiCare employee would be retained. The primary PR vehicles used to keep employees abreast of staff reductions were the newsletter and an employee hotline "Moving Ahead."
PacifiCare's upfront communications strategy also included letting investors and the media know early on that it wasn't going to meet second-quarter projections.
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