Communicating Benefits Cut-Backs

Updated: May 13, 2009

That was a major communication fail.

Whether or not the company is in good shoes and taking advantage or its employees or if it's in troubled waters and trying to stay afloat, no one can tell. And furthermore, without the right answers to the questions that are bound to come up, everyone is sure to think the worst.

How can you avoid this conundrum if you need to cut back to stay afloat?

1. Involve the employees - Believe it or not, employees have some benefits that are useful to them and others that aren't so much. Rather than decide for them, involve them in the cost-cutting decision-making process by issuing a survey that explains that cuts are necessary and you want their input to make the right ones.

"I like to send out an employee benefits survey about 4 months before renewal time to get a sense of what employees are thinking - I don't sugar coat it. For instance, for one of my clients I prepared info that addressed rising costs, revenue reduction, etc., and then asked some targeted questions," says Linda Konstan of Sensible Human Resources Consulting. Her questions included "1) what benefits were most important to the employees; 2) what they'd be willing to give up (or reduce); 3) how much more or less they'd pay for certain items," and others.

2. Be frank - No one wants to see their coworker laid-off and if cost-cutting measures can avoid that, then most will say to go for it. "If employees understand that there are choices that need to be made such as 'either we need to have everyone contribute more to existing benefit plans or we are going to have to let a certain percentage of employees go,' most people would rather step up and pay the extra, especially when no one knows whose jobs would be cut," says Patricia Fragen, a consultant with Strategic Office Solutions.

She says that company owners need to be part of the sacrificing to be fair. "To be most effective, the owners need to be sacrificing at least as much as the employees or more and be willing to disclose this fact to their staff, but the main key is open communication and a certain amount of transparency so that employees do not feel abused, but rather part of a coherent team in this fight together to make sure everyone comes out stronger when the economy shifts."

3. Understand that there will be questions - At the end of the day, whenever changes to benefits are made, employees are going to be armed with questions galore. After rolling out the changes, give employees a chance to digest the information and then hold some informal Q&A sessions to let them ask questions and get the answers they need.

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