How to communicate cost-cutting to employees

If your company had to make cuts, it's important someone from the leadership team explains the reasons why. Otherwise, the narrative can take hold that you're just another company trying to maximize efficiency with a high human cost.

Written by: Sapphire Li, BA

Communications specialist, 8+ years writing and copywriting for companies
Being honest and humane
Subject: Why we're cutting costs
Hello {First name},
"Athena canceled their Christmas party", "Athena let go of their mascot" and more.
I wanted you to hear directly from me the reasons why.
1
It is not a secret that when we took over, Athena is heavily in debt. This can be hard to imagine on the corporate level on the scale of millions, so putting this in perspective.
You have a friend who is seriously in debt. It would help enormously to sell the expensive house, sell the expensive cars.
But this can't be done tomorrow, this can't be done next week. It takes time to find the right buyers willing to pay fair prices.
So what can they do right away? Stop eating out, pause nonessential services. Of course, these costs can be said to be a 'drop in the bucket' compared with the big ticket ones but they add up over time.
More importantly, they signal a very necessary mental shift, that to survive, the era of overspending has to be over.
2
We made these very hard decisions over our first few months, as part of a long-term plan to make Athena sustainable and profitable again, so you can count on its future.3
The press is releasing this news in dribs and drabs to keep generating clicks so it seems we're constantly making new cuts.
This of course does not change how much these cuts have impacted people.
I had one-on-one conversations with many of the people this has affected to hear from them firsthand. I did not make decisions locked away in a boardroom and I would not have made them if they were not absolutely necessary for our survival and climbing out of debt.
4
I look forward to seeing you at our upcoming town hall and directly answering your questions and concerns.5
Sincerely,
{Name}
{Title}, Athena
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1.   Reference a few recent points or headlines about the cuts you and the executive team have been making to set the context and state you wanted everyone to hear directly from you, to reinforce you're addressing it head on.

2.   In many cost cutting moves, small expenses, including some company perks, can be among the first to be axed because they're easier to address. This can give the impression you're saving on pocket change, while seemingly leaving the hefty costs in place.This is why it is important to explain how saving on these small expenses add up and contribute to the big picture. Along with how you're working to bring down the huge expenses too.

3.   Explain how these cuts are necessary for the long-term survival of the company to show that you're not doing this just to earn more profit for yourself.

4.   Acknowledge how this has affected people and explain what you're doing to directly hear from them. It's important to convey you're not making these decisions in a boardroom, removed from how it's changing people's lives.

5.   If possible, hold a town hall to address people's questions and concerns head on to show you're facing and acutely aware of how the cuts are affecting people. This will go a long way to show it was difficult to make these decisions and you had to for the long-term survival of the company.

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