Dos and don’ts of communicating pay cuts

Honesty, clarity, and a personal touch are essential when bearing bad news

The good news is your company has decided to steer clear of layoffs. The bad news? They’re slashing employee compensation.

This week, Acco Brands Corp., an office product supplier based in the Chicago suburbs, announced it would cut salaries for its 2,000 employees by 47 percent for six weeks. In June, all but 20 percent would be reinstated. Acco isn’t alone in its decision: Over the last several months, other large companies—including Advanced Micro Devices, FedEx and General Motors—have instated similar policies.

Whether it’s cuts in pay, benefits, or staffing that your company has decided on to reach its bottom line in these tough economic times, none is easy to communicate. Survey results may be on your side—a December NBC News-Wall Street Journal survey indicated that 64 percent would be willing to take a 5 percent pay cut if it meant saving jobs at their workplace.

Even so, it’s wise to tread lightly.