Thinking Internal: Watson Wyatt Study

Never mind external communication for a minute, think internal too. According to Watson Wyatt, more than one in five companies (23 percent) plan to make layoffs in the next 12 months, with almost two in five (39 percent) reporting that they have already done so. But layoffs aren't the only concern employees have.

Hiring freezes also jumped from 30 percent in October to 47 percent this month. Eighteen percent are planning a hiring freeze in the next 12 months. Salary freezes jumped from 4 percent in October to 13 percent. And 61 percent are revising merit budgets. Other changes include any combination of the following: travel restrictions, benefit reductions, restructuring, reduced training, health premium increases, and salary reductions.

“All indications are that 2009 will be a difficult year for both companies and ultimately employees,” said Laura Sejen, global director of strategic rewards consulting at Watson Wyatt. “It will be up to employers to find an effective way to manage this challenge by balancing their financial situations with the likely impact on employee engagement.”

Watson Wyatt's report encourages employers to help mitigate the effect of any decision by considering employee morale, including: choosing the greatest cost savings while doing the least damage to the company's employment brand; communicating extensively and frequently; differentiating bonuses and pay increases; and heightening employee recognition programs. Here are some additional tips from employee communication programs we have developed with several companies over the years:

• Educate supervisors about any upcoming changes first. Not only are employees likely to go to them with questions first, such meetings also provide a forum to prepare for any unforeseen questions.

• Allow supervisors to communicate the basics. Studies consistently conclude that employees trust face-to-face communication the most, and look to their immediate supervisors as the most credible source of information.

• Demonstrate consistency in communication. Depending on the changes being made, employ the company's standard communication model (face to face, video conference, etc.) as a means to connect employees to top executives.

• Provide employees with written material. The outline should include why changes are occurring, what changes are being made, the rationale behind those changes (it will save jobs), and a defined timeline for communication updates.

• Establish clear lines of two-way communication. When employees have questions their supervisors cannot answer, scale for appropriate contacts, such as designated human resources personnel and/or high level management. Collect feedback and address concerns in follow-up communication.

• Communicate straight. Provide employees with clear expectations of what the changes mean, what management expects to happen, what management expects to do if it does not happen, and the frequency of updates to come.

• Notify all external stakeholders as appropriate. Provide a consistent message, including to the media if appropriate, with similar commitments to keep communication candid, open, and honest. In every case, communication should flow from the inside of the company, out.

• Follow up the communication frequently. Communication from supervisors should be reinforced by other established communication channels (eg. bill inserts, newsletters, bulletins, etc.), demonstrating the progress of the plan. (Avoid e-mail notifications as electronic communication elicits stronger emotions and has a higher risk of being forwarded.)

• Increase management visibility. Change represents an opportunity for management to establish trust with employees. It is especially worthwhile for upper management to visit departments to recognize top performers and teams.

While one Gallup poll pinpointed that employees are hoping to be reassured that they have "stability, trust, hope, and compassion," the word to remember is empathy. Understanding a person's experience by sharing that experience, especially in regard to layoffs or temporary cutbacks, can help communicators and management avoid breakdowns that leave management appearing unconcerned and untrustworthy.

Keep in mind, like all communication, communicating change is not a cookie cutter operation. It is a process that guides communicators through a series of steps, allowing them to make situational adjustments. Almost every company culture is slightly different.

More importantly, internal communication remains top of mind because no amount of external communication can reverse employee morale once it is damaged. In some cases, the effects of improper communication won't be felt until an economic turnaround, when disengaged employees will quickly leave. Where will they go? Somewhere that has created a climate of trust.