Communicating Benefit Cuts to Employees

Preparation is Key When Communicating Benefit Cuts

Every business has good years…and not-so-good years. Many organizations have recently had to deal with salary cuts, reduced hours, halting 401(k) matches, and even layoffs, leaving employees upset and wondering what will happen to the rest of their benefits package.

If you’re getting ready to announce a benefit reduction to your employees, preparation is critical. You need to communicate benefits cuts to employees carefully, or confusion and mistrust will create even bigger problems. Talking about changes that will ultimately mean less money in employees’ pockets is always difficult, so here are some best practices, as well as pitfalls to avoid, while navigating this process.

Best Practices for Communicating Benefit Cuts

Make a commitment to open communication and transparency.
Be straightforward and empathetic with employees.
If possible, involve employees in cost-cutting decisions. Consider sending out a survey explaining that cuts are necessary and ask which benefits are most important, which they’d be willing to give up and how much more or less they would pay for certain items.
Plan how to communicate the news to employees.
Inform employees of the changes as soon as possible. The more time they have before open enrollment, or when the changes will take place, the more smoothly it will go.
Lose the spin. Employees will feel misled and betrayed during this scaling-back period if it seems like they’re not being told the truth or are not getting the information they need.
Implement an in-depth message or presentation from top executives discussing the organization’s current struggles and action that will be taken.
Show employees the financial reasoning behind the benefit cuts and changes. Give evidence on exactly why the organization must implement cuts.
Express the importance of having dialogue between employers and employees. The message has to be that “we are in this together.”
Leadership visibility is especially important during a time of benefit cuts. This will leave little room for employees to feel misled.
Present a clear business case for why changes and cuts must be made. Communicate this same message multiple times and through multiple outlets to employees to ensure their understanding.
Consider implementing town hall style meetings between upper management and employees to address questions and concerns.
Maintain a long-term focus. Strategic planning for the future is important.
Continue to provide support for employees even after the changes are implemented. Be sure that they know to express questions and concerns if they have any.

Pitfalls to Avoid

Don’t assume your employees know why the organization is scaling back. Employees are looking for specific numbers and reasons why there must be changes and cuts. Over-communicating is much better than under-communicating.
A failure to disclose information and reasoning on why there must be cuts can damage employee morale and lead to the spread of misinformation throughout the workplace.
A lack of empathy from frontline managers and top executives could lead to employees feeling like the cuts are only affecting them, and not the entire company.
Keeping employees ignorant until the last minute can result in a loss of trust in management or the organization as a whole.