How Microsoft announces layoffs will show the company's PR IQ
- 17 July, 2014 23:35
If Microsoft does pull the layoff trigger today, as many expect, the company will face public perception problems if it doesn't make the smart moves, a crisis communications expert said Wednesday.
"Layoffs are always perceived to be potential crises," said Gene Grabowski, senior strategist at Levick, a Washington, D.C. firm that specializes in corporate communications, especially in advising firms on dealing with high-pressure situations. Grabowski has advised numerous companies on how to handle cut-backs, including law and insurance firms and large manufacturers.
Microsoft is expected to announce large layoffs as early as today, according to several online reports, including ones by the New York Times and Bloomberg. The former, citing people briefed on the decision, said that Microsoft's human resources group has reserved conference rooms for today, a signal that meetings with laid-off workers will take place.
The newspaper also reported that the layoffs will be the largest in the company's 39-year history. Microsoft's last large-scale layoff was in 2009, when the firm cut loose nearly 5,800 employees.
CEO Satya Nadella last week issued his first mission statement for the company, a 3,100-word missive that, said analysts, was in many ways written to prepare employees for a purge.
"Layoffs are very personal, they affect everyone and their families, both those laid off and those who remain," said Grabowski, and it behooves a company -- whether Microsoft, which has nearly 130,000 employees, or a small private firm with less than 100 -- to make the smart moves that can lessen the shock for those impacted as well as limit damage to its reputation and how it's perceived by investors, customers and partners.
"Companies should communicate to employees with a simple message," said Grabowski, of the first step firms should take. "That message should be clear so that people can repeat it, and they will, accurately. The internal message should also be identical to the external message, because today the main source of external news is internal messages, distributed by social media."
Discrepancies between what those inside Microsoft hear, and what people not employed by the company read, is just asking for trouble, as it creates the impression that the company is being disingenuous, even duplicitous. People will seize on that in a heartbeat, and spread it on social outlets, like Twitter and Facebook.
"Uniformity of messages is imperative," Grabowski said. "Layoffs are situations where people are more likely to have an opinion, and they'll express it."
Microsoft should also reach out to the media as soon as possible, if only to pre-empt a rash of negative commentary, to tell its side of the story. Failure to do so will only leave a vacuum that others will fill. And most times, that vacuum is filled with very negative news.
"They should get out the news and onto social media before anyone else," Grabowski advised. "That message should be the same as what's used internally, it should not be any different. I'd get to reporters and bloggers quickly, all those who cover the company. And not in a press conference or a statement."
A press conference, said Grabowski, is too risky, because as a rule they're difficult to manage. "Reporters are a lot bolder in a pack," said Grabowski. "Try to reach them one-on-one, and give each something useful and unique, or apparently unique."
The choice of who talks to the press is also important, Grabowski said. "Companies have to be very, very careful about picking spokespeople. It's always best if they have a person who appears to be sympathetic. It shouldn't be a lawyer, and probably not the CEO unless he or she has a good relationship with the media and the public, someone who is perceived as a nice person."
Issuing a statement and calling it a day is a bad idea, Grabowski argued, saying that that implies the company is too corporate, too cold, too heartless. "You should retail news of a layoff, not wholesale it," he added. "Too often, companies in these kinds of circumstances work toward efficiency rather than effectiveness. A statement may be more efficient, but it's not effective."
Specific to Microsoft, Grabowski said that, assuming layoffs are announced this week, the company has already made one good move: Separating it from next week's financial disclosure.
"If you want to defuse the situation, it's smart to do it before [financial earnings] are announced," Grabowski said. "It will reduce the tension [of the earnings call], and more importantly, make sure that negative news doesn't step on the story of good financial news, if that's what they report."
Microsoft will hold its second-quarter call with Wall Street analysts on Tuesday, July 22, starting at 5:30 ET (2:30 p.m. PT).
Whether Microsoft ends up adopting any of Grabowski's recommendations is up to the company and its leaders. But going by past practice, it won't.
In 2009, when the company laid off 1,400 people immediately, and over the next months upped that number to around 5,800, it broke the news with a press release that, per regulations, was also filed with the U.S. Securities and Exchange Commission (SEC). The release mixed news of Microsoft's financial performance in the preceding quarter with that of the layoffs. It was quickly followed by a separate filing of a copy of the email that then-CEO Steve Ballmer sent to all employees early that morning.
That email was also a blend of financial and layoff news.
"The decision to eliminate jobs is a very difficult one," said Ballmer in the Jan. 22, 2008, email. He also announced a company-wide meeting for the following day, a meeting that was webcast to accommodate Microsoft's far-flung empire.
Hours later, Microsoft held its fourth quarter 2008 earnings call -- long before the market bell, an unusual step -- and Ballmer participated, which he rarely did. But then-CFO Chris Liddell got the job of reading from a prepared statement at the beginning of the call.
"Today, we have also announced steps we will take to further manage our cost structure," Liddell said then of the belt tightening. "These steps include a reduction in headcount-related costs, including plans to reduce up to 5,000 positions in the areas of research and development, marketing, sales, finance, legal, human resources and IT over the next 18 months, of which 1,400 are effective today."
Liddell also said that there would be no pay raises at Microsoft for the next fiscal year, which started in mid-2009, and talked of reductions in contract workers, travel expenses and marketing expenses.
Microsoft initiated the 2009 layoffs as technology spending plummeted, one of the many side effects of the recession that started the year before.
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is firstname.lastname@example.org.
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