In my experience, there are two main schools of thought on how companies should communicate with employees during a recession.
1) It is better to wait to communicate with employees until you have all the information you can gather. Otherwise, employees may ask questions you cannot answer and you may look bad from their perspective.2) We all live in a world of uncertainty and waiting before presenting information will only stimulate the rumor mill and employee anxiety.
This blog post will summarize why I prefer the latter approach. I will use as an example the situation I wrote about recently, of having to layoff or terminate employees as a last resort to get through a recession.
When Employees Smell Smoke, They Look for the Fire
Even if your organization keeps its employees during a recession, the employees know friends who are getting laid off or terminated. Consumer sales are probably down and the organization has cut out spending wherever it can. On its face, doesn’t this sound a little mysterious? How can this be? Does the owner have a goose laying golden eggs?
When Employees Cannot Find the Fire, They May Create Their Own
So let’s say your employees cannot figure out the apparent mystery of their good fortune with so much misfortune around them. After all, those other places probably did good budgeting and cut costs, too. Nature does not like vacuums and tends to fill them as soon as possible – especially if you don’t have an effective workplace communication strategy in place, you may be implicitly asking your employees to spin up the grapevine to fill in what you have not been telling them.
Like Ancient Times, People Still Create Myths to Explain Things They Do Not Understand
“Everyone is going through bad times, except for us. There must be a day of reckoning in our future. The company cannot afford to be this good to us, unless it is going to be sold to a deep-pockets mega-company. So that’s how the organization will get compensated for the risk they are taking keeping us. I’m glad I figured it out- and I better warn everyone else!” This can actually be the thought occurring at 2 a.m., when an employee cannot sleep due to their anxiety. Who doesn’t love a conspiracy theory?
The Irony of It All
You have done your best for your employees when they most need it. Your efforts may have taken away capital you intended to use other ways so you could cover payroll. You may have paid overtime to your accounting staff to budget and re-budget to keep expenses ultra-low so you could keep employees working. And now you have disgruntled employees anyway. What’s that about? When the dust settles, your employees will probably realize and appreciate what you have done for them. Let’s start settling the dust.
Pros and Cons of Communicating with Employees
There’s no question in my mind that the decision to communicate with employees about difficult and sensitive information must be carefully weighed. In this situation, I would have recommended that employees be informed about the budgeting and re-budgeting and expenses that were required to save their jobs. I also would have recommended that the employer tell the employees why this direction was chosen – to help them avoid, as long as possible, their entry into a tough job market. That would have filled the vacuum created by not giving them this information.
Why Not Communicate with Employees in These Difficult Situations?
I have known employers to be reluctant to communicate with employees for multiple reasons, primarily these:
- Employers think they must be able to answer all questions employees might ask or they should not communicate with them.
- Employers may be too timid to say publicly that their organization is in a difficult financial spot.
- Employers are afraid of confrontation. They do not want to implicitly or explicitly encourage employees to second-guess them by meeting with them.
- Employers sometimes forget that choosing to do nothing is a choice and it has repercussions, as does a more active choice.
When deciding if you should meet with employees, consider getting advice from a broad range of people. Take into account many of the perspectives that exist in your organization. For instance, you might ask opinions from trusted employees, supervisors, and consultants in addition to senior management.
Consider including these points in your discussions with your advisors:
- Pros and cons of having open communication with employees.
- Pros and cons of how much and in what way information is given to employees.
- Whether any of information considered for communication with employees discloses trade secrets or proprietary information that may be damaging to the organization if it becomes general knowledge.
- How the information might be received or construed by employees.
- Whether supervisors or managers should be made available for individual employee questions, or whether all responses to the questions should come from one source?
- If the organization ultimately has to layoff or terminate employees, will the employees be able to understand the reasons if you do/do not communicate with them beforehand?
- Would you want employees to know how hard you fought to keep them on payroll?
- Will communicating with employees help blunt possible bitter feelings toward the organization?
HR Policy Solutions, PLLC
Note: Even though I have worked with employment laws for over 20 years, I am not a lawyer. Nothing in this blog should be taken as legal advice or interpretation of laws.
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