1. Sharing Challenging News with Employees
GFA Phoenix Meeting, September 2009
Susan Cary-Hanson, PGC
Sharing Challenging News with Employees

2. Background Information
What’s the current problem with the Employer/Employee relationship?
Lack of trust of management
An all time low and why?
Examples of abuse and misuse of power:
Enron collapse, WorldCom stock scandal
Fannie Mae, Freddie Mac required government intervention
Lehmann Brothers bankruptcy
Merrill Lynch and Bank of America situation
Bonuses paid to executives
AIG bail-out and payment of additional bonuses

3. What is bad news? Topics include: Change of business strategy
Lay-offs
Closing of plant/division
Death of an employee
Change in benefits
Health care, premium contributions
Change in compensation or hours
Information of a sensitive nature
Employee clothing or hygiene problems
Employee performance
Loss of a customer

4. What do employees want? Honesty Empathy Immediacy of information Facts
As much information as possible
Answers to questions

5. The Delivery Process Deliver news in person Be up-front
Individually, small groups, or in large meeting
Be up-front
Tell as much as is possible
Remind employees that “Truth is a moving target in development and execution of the plan”
Emphasize “This is the information today as we understand it”
If more than one person in the company is sharing the news, prepare written talking points

6. The Delivery Process Who should deliver the information?
Determine who is the best person
The person should have a good reputation within the company
Ability to be honest, open, sincere, and caring
Plan and think through your delivery to avoid problems of misunderstanding, rumor or lawsuit

7. The Delivery Process
At the end of the day, we all run businesses and we make business decisions
There will be fallout due to your actions
Think through the possible down sides to your business decision
What is the message you want to leave with employees?
Does your script allow for that (test it with trusted employees)
Be prepared for questions

8. PGC Example – Health Insurance
This was a business issue related to the recession and downturn in customer orders
I delivered this news after we had already conducted two lay-offs and reduced employee hours and pay
Health insurance at PGC was previously a rich benefit; we paid almost 90% of dependent coverage
We needed to get our employer contribution in line with other small employers in Minnesota
I was concerned about employee acceptance of this, again, negative news

9. PGC Example – Health Insurance
Our 2008 medical loss ratio was high due to surgeries, illnesses, and hospitalizations
September 2008 – first mentioned my concern about the 2009 renewal process
Informed employees if they have other avenues for obtaining health insurance, this was the time to do this
Our independent review of the current market situation, indicated that our health insurance premiums on the open market would increase by at least $5,000/month vs. our current provider

10. PGC Example We had 4 options to review Review of dependent coverage
New health plans from 100% hospitalization and low co-pays to:
500 Deductible with 90% hospitalization
1000 Deductible with 80% hospitalization
1500 HDHP Deductible with 100% hospitalization
3000 HDHP Deductible with 90% hospitalization
Review of dependent coverage

11. Our Strategy Work to reduce our expenses to keep jobs
Communicated to employees how they could contribute to this effort by:
Working on their health and wellness and by using health care services appropriately
Generic drugs vs. Brand name drugs
Urgent care or Minute clinics vs. Emergency rooms
Continue to produce quality parts
Participate in cross-training
Offer other cost savings ideas
The goal: To keep employee’s premium contribution to the lowest level possible

12. Offered Alternatives
Shared background information on health insurance in United States
Gave employees information about how to obtain insurance on their own if they chose not to participate in our plan
Met with each employee individually three times over the course of 6 weeks
Shared scripted information - The why
Discussed options -The available alternatives
Asked for questions - Their concerns

13. Questions Complied Questions included:
What is open enrollment and how does it work
What does employee benefit eligibility mean
When do the new benefits begin
Pre-tax dollars for weekly healthcare deductions
What are all the benefits offered by PGC
What healthcare plans are being offered
How can I determine how much I spent on healthcare last year and how can I review by claims
How do deductibles work
How do I enroll in benefits
What is the definition of child
Dependent coverage
Pre-existing definition
Specific plan design questions

14. The Follow-Up
Complied all the questions and had our insurance company provide answers in writing
Posted all questions and answers for employee review
Group meetings offered by our insurance company to share “state of health insurance” and answer more questions
Specific questions answered in private
Met individually with all employees to answer questions again – listen to concerns, empathize and share my experience/frustration over the situation

15. Bad News Process Summary
Determine what needs to be discussed
Discuss how/the process of sharing information
Group meeting
Individual meeting
Develop talking points
Who will share the information
Script
Follow-up on questions

16. Bad News Process Summary
Be honest, sincere, open
Empathize
Celebrate the small successes
Thank employees for their involvement, suggestions , and concerns
Then….Implement and Review as needed