Newspaper article THE JOURNAL RECORD

Using Silence as Strategy: Communications on Potential Layoffs Tricky Territory for Companies

Newspaper article THE JOURNAL RECORD

Using Silence as Strategy: Communications on Potential Layoffs Tricky Territory for Companies

Article excerpt

Major changes are underway at Chesapeake Energy, as evidenced by the announcement of an organizational realignment on Tuesday by CEO Robert "Doug" Lawler. Analysts have speculated for months that a reduction in the workforce is likely. But the company has repeatedly declined to comment when it comes to layoffs. The Journal Record spoke with experts who debated whether saying nothing is a good strategy.

The company has many more employees than its peers. At the end of 2012, Chesapeake had about 12,000 employees. During the same period, Irving, Texas-based Pioneer Natural Resources, a driller with about the same market capitalization, had only 3,300 employees. Devon Energy, which had about the same revenue as Chesapeake in 2011, currently has about 5,500 employees.

Bound by disclosure laws, there is likely a reason the company hasn't responded to multiple media inquires questioning whether layoffs are planned. Robert Weber, professor of corporate law at the University of Tulsa, said that's probably because the company doesn't yet have firm plans on how it would trim employees.

However, if there is a possibility of layoffs, a company should let its employees know, said crisis communications expert Jim Lukaszewski. Lukaszewski, co-chairman of the Board of Ethics and Professional Standards of the Public Relations Society of America, has managed crisis communications for more than three decades. There's no good way to fire people, he said. But it's best when a company acts quickly and is transparent, rather than drawing out the process and terrifying employees in the meantime, he said.

Weber said it's not surprising that the company isn't saying much, because it has already made it clear it would restructure. In 2012, activist shareholders Carl Icahn and O. Mason Hawkins took control of the board of directors. At the time, Hawkins wrote in a prepared statement that the new board members would help prudently guide the company's management to improving value for shareholders. The company has continued to shed assets and subsidiaries since June 2012 in an effort to reduce billions in debt. On Aug. 1, Lawler told analysts the company is working on a strategy to balance expenses with cash flow and stay on budget. …

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