Taking The Sting Out Of Benefit Cutbacks

Smart employers realize that the key to managing benefit cutbacks rests with understanding effective communication and the perceived value of their benefits programs. While employees may initially shake their heads over seeing a reduction in benefits and salaries, they will understand those decisions if employers frame the reductions within the full business context.

Many U.S. companies have had to redesign and reevaluate certain benefits and compensation programs to reflect the new economic reality. Sometimes this entailed suspending the company’s 401(k) match.

One of the biggest success points in managing the cutbacks is to make sure that workers understand that the benefits programs are not the only programs within the company being reevaluated. You don’t want to make this a benefits conversation but a larger conversation about saving jobs. The company needs to look at fresh and different approaches toward its benefit programs, with the main goal of being competitive and saving jobs.

Employers need to give workers more credit for being able to comprehend the big picture too. Don’t underestimate employees’ ability to understand why you are cutting or reducing certain benefits. Be honest with your workforce and emphasize that the decisions were made to save jobs. Workers will see through company statements that say revenue was down a little and profits were up, but fail to mention that 10% of the workforce has been cut.