The questions have been coming hard and fast at RTC Industries, Inc. Will we have more layoffs? What benefits will be suspended or cut? What kind of new business is the sales force trying to drum up? Will we have summer hours this year? Why should I feel secure?

After a few rough years in the late 1990s, RTC, a leading designer and manufacturer of in-store display units, has felt the downdraft of the recession and the economic pressures on its retail clients. Over the past year, the Rolling Meadows, Ill.-based company has undergone three rounds of layoffs, totaling about 100 employees, and suspended benefits such as subsidized health club memberships and tuition reimbursement. Not surprisingly, employees are now nervous.

There’s a key lesson for any company that strives to become a winning workplace, even one with many of the key building blocks already in place: Smart people practices will not insulate a company from a tough economic climate or industry-wide changes. The test is in how the company responds. “People have felt very vulnerable,” says Richard Nathan, CEO of the $130 million, family-owned business. “Coming off a record couple of years, we had to regroup and guard against a loss of confidence.”

With most of its 350 U.S. employees in the Chicago area, the company redoubled its efforts to communicate openly, seeking to spread the word about developments in the industry and put to rest company rumors before they became destabilizing. RTC also started seeking employee suggestions on cost cutting to help ensure that, if there is pain to be shared, employees are at least involved in the process.

Company-wide town hall meetings, which provide employees with the opportunity to ask questions directly or submit them anonymously, have become more frequent than their usual once-a-quarter pattern. The large meetings, presided over by Nathan, are usually followed by informal, no-agenda luncheons with much smaller groups of employees and the CEO. To try to further manage uncertainty and gauge morale, RTC recently began implementing “associate feedback surveys,” which are one-on-one meetings between four different employees each week and human resources managers.

Many of the issues raised by employees center on their employment future and their benefits. For Nathan, being decisive, even-handed, and straightforward is crucial, especially when explaining the decisions that led to layoffs and suspensions of accustomed benefits. “We’ve tried to be very open and explain that we are not cutting ‘core’ benefits,” Nathan says. Jean Carlson, director of human resources, adds “We are using the word ‘suspended,’ rather than the word ‘cut,’ very intentionally.”

RTC has drawn the line at benefits that touch the physical and mental well-being of its employees and help foster loyalty. For example, health care benefits remain intact. The annual company-wide holiday lunch at the end of the year was preserved last year though the company cut costs by moving it from a restaurant to RTC’s Chicago plant. RTC’s Employee Assistance Program, with its confidential, 24-hour hotline to an outside firm offering guidance on emotional, financial, and legal issues, seems sacrosanct in these times. In fact, laid-off employees are entitled to use the program for several weeks after leaving RTC.

Long-serving employees such as department sales manager, Anita Stayner, know that straight answers from management won’t by themselves turn an economy or a company around, but she appreciates the honestly nonetheless. “There’s not a lot of beating around the bush,” says Stayner, who has worked at RTC for 19 years. “Everyone kind of feels still grateful to have a job, and we’re willing to help the company work through the challenges.”

That kind of support, of course, is easier to hear than the tough questions. However, Nathan says that being open to whatever is on his employees’ minds is “part of our core belief structure.” With this foundation, RTC seems well placed to build for the future, once the economy bounces back.

Company: RTC Industries, Inc.
Web site:
Industry: Marketing services
Location: Rolling Meadows, Ill.
Number of employees: 350 (U.S.); 450 (international)
Sales: $130 million