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. 

“We wanted to communicate our benefit cutbacks in a way that was straightforward and complete,” thus minimizing the impact on employee satisfaction and engagement, explained Maia D. Lucier, director of compensation and benefits at Dimension Data, an information technology services and solution provider.

Lucier spoke yesterday at a session on managing benefit cutbacks at the 22nd annual Benefits Forum & Expo in Atlanta. Like many U.S. companies, the Virginia-based employer has had to redesign and reevaluate certain benefits and compensation programs to reflect the new economic reality. This entailed suspending the company’s 401(k) match. 

Lucier believes that her biggest success point in managing the cutbacks was to make sure that workers understood that the benefits programs were not the only programs within the company being reevaluated. “We didn’t want to make this a benefits conversation,” but a larger conversation about saving jobs. The company is now looking at fresh and different approaches toward its benefit programs, with the main goal of restoring the company’s 401(k) match, she added.

Employers need to give workers more credit for being able to comprehend the big picture, said Tony Holmes, principal at Mercer, who also spoke at the session. “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,” he added. 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.