Keep workers in the loop on layoffs, experts say

There's no easy way to go about laying off workers, whether you're cutting 15 jobs or 7,000.

But as companies such as Pfizer, Merck and General Motors cut jobs to restructure, experts say communicating what you can to workers will help ease the pain.

Merck's initial public announcement last Monday that it would eliminate about 7,000 jobs came with so few details that it seemed most of the company's 62,000-person workforce was in the dark about where cuts would be made. As questions mounted, the company released a series of statements responding to media inquiries the next day that shed some light on Merck's plans. Employees at its Rahway facility were told that day that long-term manufacturing operations there will cease, and the company later confirmed that 250 jobs in Rahway will be lost by 2007. Employees at plants in Canada, Pennsylvania, Georgia and Japan were also given the news that day that jobs would be cut or their factories would be closed or sold by 2008. A Canada plant will lose 235 jobs; the Cherokee plant in Riverside, Pa., the Flint River plant in Albany, Ga., and a plant in Japan will close.

Merck spokeswoman Janet Skidmore said that after the company decided to pursue a restructuring, it made the announcement in accordance with laws governing publicly traded companies.

"Talking to employees before other interested parties is a violation of SEC rules,'' Skidmore said, adding that any worker who will be out of a job come Jan. 1, 2006, will be notified no later than Dec. 16.

"It was done in piecemeal,'' said Paul Dorf, managing director of Compensation Resources Inc., an Upper Saddle River consulting business that specializes in compensation and other human resource-related issues. "Crises communications need to be handled better than that.''

Dorf noted that he has a relative who works for Merck.

Leonard Posey, a senior vice president with global career services firm Lee Hecht Harrison in Parsippany, said the handling of Merck layoffs isn't unique.

"The scenario played out recently with Merck is common with other organizations, too,'' said Posey, adding that Merck is a client of his firm. "It's understandable that some questions go unanswered because in most cases a layoff is a work in progress.''

When Pfizer Inc., for example, told Wall Street in April that it would slash $4 billion in annual costs by 2008, it said plant closings and job cuts would be part of the plan. But it wasn't until last month that the first specifics were announced, which include the elimination of 490 jobs, shuttering at least one plant and forgoing plans to build a new facility in Parsippany.

But in late November, General Motors Corp. took a very different approach than Merck in announcing its restructuring plans. After the battered carmaker saw its stock hit an 18-year low, it announced a new job-cutting target of 30,000 at the same time it outlined specific plans to either close or recast operations at 12 facilities by 2008.

Jeffrey Faue, president of Fauecast Management Consulting in New Brunswick, said telling all interested parties at once is best when possible.

"It's important to say what you can simultaneously to everyone involved so people know, 'If it's going to be me, at least I will have a severance package,' or 'OK, it's not going to be me, but there are plans in place to make the workload manageable,'Ÿ'' Faue said. "Layoffs affect everyone in an organization and mapping out as much as possible helps to address people's concerns.''

But when a company can't disclose specifics, he said, some information is better than saying nothing.

"The most creative author couldn't imagine up some of the things said in the rumor mill,'' said Faue. "It's always best to tell people as much as possible, to the extent that is possible.''

Faue and Dorf also said being as forthcoming as possible can help keep a company from losing key talent.