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Communicating Benefits During Layoffs Can Be Tricky

February 23, 2009
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Related Topics: Benefit Design and Communication, Featured Article, Compensation
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In 2008, Andy Landis noticed that his routine retirement education seminars no longer ran quite so routinely. Increasingly, employees at forest products company Weyerhaeuser wanted to know the benefits impact if their retirement date was selected for them—by a sudden layoff.

Meanwhile, managers started asking Landis, a Weyerhaeuser life and retirement planning manager, to conduct sessions with small groups of employees vulnerable to job loss—say, when their current project ended—so they could better understand their benefits options.

Providing these types of details proactively seems to help in an uncertain job climate, according to Landis. "What we’ve been told by managers is the anxiety level goes way down," he says.

Employees also may be more receptive while the layoff is still only a possibility, Landis says. "Their ears may be more tuned in to hearing what the facts are."

With tens of thousands of U.S. layoffs occurring each month, corporate leaders are trying to negotiate a delicate balance: How do they ensure that jettisoned employees pay attention to sometimes time-sensitive and complex decisions at an emotion-laden time? Even during a routine workday, understanding the various acronyms and terms involved can be daunting: COBRA, lump sum, 401(k) rollover and so on.

"When you’re stressed, you do not function very well—it’s as simple as that," says Judith Bardwick, a psychologist and author of One Foot Out the Door: How to Combat the Psychological Recession That’s Alienating Employees and Hurting American Business.

After employees hear the word "layoff," they may appear relatively unfazed, Bardwick says. "But they are not normal. They cannot focus. They cannot problem-solve. They cannot analyze."

Handling the initial shock
Many of today’s employers are striving to be forthright about their company’s financial forecast, according to a December 2008 survey by global consulting firm Watson Wyatt Worldwide. Eight out of 10 employers reported communicating details about their company’s solvency and performance in the previous two months, according to the results, based on responses from 92 employers.

Perhaps few companies understand the challenges posed by industry upheaval better than Weyerhaeuser. The company’s employee count has shrunk from 54,000 in 2004 to about 19,000 at the end of 2008 as the company sold off business lines and closed some facilities. In mid-2008, Weyerhaeuser leaders notified employees that roughly 1,500 people would be laid off by the end of 2009, including about 1,000 from company headquarters in Federal Way, Washington, according to spokeswoman Shannon Hughes.

Each laid-off employee faces numerous related benefits decisions, Landis says. "Some have deadlines on them. Some of them don’t. Some of them are irreversible," he says.

Educating employees in advance—albeit an intriguing idea—can be risky, says Kathryn Yates, global director of communication consulting at Watson Wyatt. In the December 2008 survey, just 38 percent of companies reported communicating with employees about job security.

If layoffs appear imminent, a company may lose its most marketable employees first, Yates says. "You want to keep people focused on work and yet you want be straightforward with them. Where is the sweet spot for your company and for your employees?"

Once layoffs become public knowledge, human resources leaders can take several steps to keep communication lines open, Yates says. Be sure to prepare the most important benefits information in writing, since the employee will likely absorb few specifics during that first conversation. For example, frequently asked questions could be broken into several broader categories, including retirement, severance payouts and health options under COBRA (Consolidated Omnibus Budget Reconciliation Act).

Follow-up questions, of course, are inevitable. To better field those, Yates recommends establishing a centralized hot line. That line can be answered by a cadre of people who will not only have the necessary information handy, but will have been trained not to guess at specifics or become inadvertently drawn into "Why me?" or other types of awkward or emotional conversations, Yates says.

That personal touch
Corporate leaders should think twice, though, about relying too much on written materials, particularly in the first days after a layoff, says psychologist Bardwick. "In periods of high emotion, communicating people-to-people is best," she says.

Instead, Bardwick recommends that human resources leaders organize a benefits session for laid-off employees, scheduling it several days after the announcement, "so people have time to get past the shock." The session could be held off site and combined perhaps with outplacement or other job training services, she says. Another sensitive gesture: Ask the employee to invite a friend or family member along to help take notes and provide support.

In an effort to retain that personal connection with laid-off employees, Weyerhaeuser officials handle all severance-related questions internally, using the same 1-800 human resources number provided for active employees, says Greg Thiessen, director of manager and employee services. With an average tenure of nearly 14 years, Weyerhaeuser employees often have accrued both significant corporate benefits and emotional connections to the company, he says. "We’re part human resources expert, part counselor, part someone to vent at."

In the last six months of 2008, the hot line’s call volume was 400 to 500 a day, compared with 250 to 280 previously, Thiessen says. Those calls are driven by a variety of factors, including the transition of employees to other companies, along with layoffs, he says.

Weyerhaeuser does not limit the time devoted to each call, as can occur when such services are outsourced, according to Thiessen. The effort is worth every penny, he says.

"We know that we’re letting good people go in these economic conditions," Thiessen says, noting that employees who believe they have been treated well amid dispiriting circumstances might fill out a Weyerhaeuser job application again once the economy rebounds.

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