August 26, 2014
Layoffs May be Good for Business, but Bad for PR
Macy’s announces 2,500 layoffs and five store closings; their stock increases eight percent. Sony slashes 5000 jobs and sees a 3.9 percent stock increase. Hewlett-Packard reveals another 11,000-16,000 job cut, in addition to the 34,000 previously announced. They are rewarded with a six percent stock jump for the quarter and 27 percent increase for the year. Barclays will deliver another 19,000 pink slips in the next three years. Wall Street cheers, and their stock rises seven percent.
While this is great news for investors, “job killing” is not great for PR. As Ronn Torossian points out, the court of public opinion does not wait to pass judgment. In order to thrive, or sometimes just survive, some companies must eliminate jobs. When a small number of individuals lose their jobs, even though those workers survival is at risk, the public can understand a few job losses. When the layoffs number in the thousands however, people are not so forgiving.
Layoffs are often necessary, but never pleasant. Strategic planning and effective messaging can help minimize the negative PR that layoffs generate. Large job cuts are rarely ever a spur of the moment decision. Companies need to utilize the time before the announcement to put a PR strategy in place. Offering decent severance packages and help finding future employment will help lessen some of the impact.
The message should show that management realizes the hardship of the layoffs to both the terminated employees, and those staying with the company. The business should not sugar coat the severity of the job losses, but should highlight the positive outcome for the health of the company. It should also stress any sacrifices that top management makes.
When Barclays announced its restructuring, part of the message it broadcast let people know that the CEO, Antony Jenkins, had not taken a bonus in two years.
Ronn Torossian explains that the company also needs a clear, well-defined vision of the company after the layoff and communicate this effectively. When Macy’s CEO, Terry Lundrgren announced their layoff, he had specific details on departments and stores affected. Macy’s also relayed information that all 2500 employees would receive severance.
In order for the public to forgive such massive layoffs, the business must focus on the health of the company and not the bottom-line for investors. Otherwise the risk of seeming uncaring multiplies, which could ultimately have a very chilling effect on the bottom-line.