When the AOL unit of Time Warner recently announced it was laying off 5,000 members of its worldwide workforce, it went through great efforts to make its announcement as
upfront and detailed as possible. The company's announcement stressed the underlying reasons behind its decision, detailed why this action was unavoidable, and spelled out how
much this would ultimately cost the company (upwards of $175 million in employee severance).
Earlier in the year, Ford Motor Company made an announcement of its own layoffs: Up to 30,000 workers would be let go in a period between this year and 2012. Unlike AOL,
however, Ford did not come present the details of its layoffs, its costs, and its underlying reasons. In fact, the official announcement of the reductions came in the seventeenth
paragraph of a five-page press release that emphasized its upcoming cars and its reputation for auto industry innovations.
From a PR standpoint, announcing the news of massive layoffs is never pleasant. But in today's economic environment, it is happening with increased frequency. Within the past
two months alone, news of workforce reductions has come from industry titans including Eastman Kodak, Disney, Bank of America, Xerox, Sun Microsystems, Westwood One, Credit
Suisse, Nokia, Whirlpool and VNU Publishing.
According to PR, media and HR professionals queried by PR News, it appears both AOL and Ford have logic to their respective approaches.
Bad News Rising
Most J-school students will recall the old adage that bad news sells newspapers. From a media perspective, hiding negative economic news is futile.
"If you have bad news, just come out with it," says John Persinos, editorial director of Larstan Publishing and author of the new book The Confessions of an Ink-Stained
Wretch: An Insider's Secrets to Getting Press.
For Persinos, the AOL approach was more successful than the Ford approach. "Be forthright and get it out front," he says. "Don't try to be cute or send out long press
releases that bury the lead. People will see through it and reporters will cover it more because you tried to bury it. And you can't hide it, anyway - the truth will come
out."
Persinos adds that economic stories involving layoffs automatically get considerable coverage. "The press tends to pay attention when there's an easily grasped news hook," he
continues. "Especially in television, where you can stick a microphone in someone's face and ask them how they feel to be laid off."
The news from both AOL and Ford was not unexpected - both companies had suffered long-publicized financial losses. In fact, the news of the Ford announcement was leaked a day
before the official press release in a Time Magazine cover profile of Ford CEO William Ford Jr. Ironically, the Time profile was perhaps the only genuinely positive
media coverage of Ford for that week (a glowing study of the CEO's career and his eclectic interests, ranging from environmental concerns to martial arts).
Michael J. Smith, principal of Michael Smith Business Development in Arlington, VA, and former executive vice president and general manager for Euro RSCG Magnet, gives Ford
points for trying to create a positive environment prior to the breaking of the major bad news.
"You have to stay ahead of the story," advises Smith. "Collateral damage may occur if a company doesn't do a good job announcing what their intentions are and letting everyone
know. This way, the rumor mill doesn't take over."
Spinning Tales
From an HR perspective, the rumor mill is the most lethal source of negative PR. "Whether the rumors begin in the company cafeteria or in the trading pit, misinformation can
spin itself out of control," says Mark Graveline, president of the HR advisory group Saiko Consulting in Clinton, CT. "It is particularly demoralizing for those on the inside,
who are fielding all sorts of tales and have no clue what's right and what's wrong. That Time Magazine coverage before the official announcement at least confirmed what
many people feared."
But where AOL seems to have been ahead of Ford, at least in a PR perspective, came from injecting an element of human considerations into its announcement - not only for those
losing their jobs, but also for those with investments in the affected company.
Whereas AOL's announcement clearly defined the reasons for its decisions, Ford vaguely touched upon it in its official release. The third paragraph of the five-page release
(dubbed "Ford's Way Forward Plan" briefly cited the severity of its decision by quoting CEO Ford as stating: "We will be making painful sacrifices to protect Ford's heritage and
secure our future."
However, it was the seventeenth paragraph of the Ford announcement that the point was made: "Plant-related employment is reduced by 25,000-30,000 people in the 2006-2012 time
period, in addition to salaried personnel reductions and a reduction in the company s officer ranks." There was no further mention of those being affected or severance and/or
outplacement assistance for the Ford employees.
Meryl L. Moss, CEO of Meryl L. Moss Media Relations in Westport, CT, believes this is where Ford erred. "You have to remember that when you announce layoffs you are talking
about people who lost their jobs," she says. "You're not checking off boxes on a graph - you are sending tens of thousands of people into unemployment. AOL was smart enough to
show they were providing for their staff."
Smith concurs this was a serious void in the Ford approach. "Any part of your announcement should include how you will help your workers with outplacement," he says.
However, Smith quickly adds there is one audience than is less than troubled with the humanity element: The investment community.
"Often, layoffs are announced as a way to trim costs, and generally Wall Street responds fairly favorably, frankly, to reducing human capital and increasing automation," he
says.
Contacts:
John Persinos, 301.385.7211; Michael J. Smith, [email protected]; Meryl L. Moss, [email protected]; Mark Graveline, [email protected].
Before Going To The Media
For companies planning to make a major announcement of layoffs, here is a basic PR checklist on who needs to be informed before the media is called in:
* The board of directors. The place to begin is literally at the top. If no one is communicating with the board on these matters, there is a serious disconnect within the
company.
* The investor community. For public companies, this is a given - while Wall Street will probably look at layoffs as a means of increasing productivity and profitability,
negative buzz could nonetheless affect stock performance. Private companies with an eye on going public may want to keep their IR advisors in the loop as well.
* Local and regional government leaders. If the layoffs are of a massive nature, such as the case of Ford Motor Co., outreach is needed to local and regional government
leaders. A large wave of newly unemployed workers will have a drastic effect on the local economy and tax base.
* Union leadership. If the workforce in question is part of a labor union, then the union leadership needs to be part of the process as well.
* The workforce itself. However, this is not the job of the corporate communications department alone. Due to the profound nature of this news, it should be delivered by
senior management (preferably the CEO) with diplomacy and tact - and not as a monologue, but as a dialogue with those being affected. If the internal communications can host
either a company-wide broadcast, try to have the news presented by a living person rather just a text in a newsletter or intranet forum.