Layoffs are arguably one of the most challenging aspects of an HR manager's job. Oftentimes, HR serves as a mediator between an organization and its employees, making it very difficult to considerately navigate the feelings of everyone involved.
However, just because it's difficult doesn't mean it's impossible to handle layoffs with care and compassion. It's not just the human thing to do – it's the smart thing to do, as layoffs can greatly affect the morale of both current and incoming employees within the organization. Many of us probably heard of the CEO of a FinTech startup who came under fire in 2021 for announcing the mass layoff of 900 employees over a Zoom call.
While layoffs aren't easy for both organizations and their respective employees, there are certainly more compassionate and respectful ways to let your employees go than through a Zoom call. In this article, we look at the benefits of managing layoffs and downsizing with compassion, and detail how to do so effectively.
Layoffs have a ripple effect
Layoffs can happen for various reasons and through different economic landscapes. Regardless of the context, when employees are hit with the sudden news that they have been laid off, the entire workforce – not just the portion that has been laid off – can be negatively affected. A Harvard Business Review article writes, "Studies show that nearly three-quarters (74%) of employees retained after a layoff saw their productivity decline after it, while 69% said that the quality of their company's product or service deteriorated. When these respondents were asked why they felt that way, they expressed feelings of guilt, anxiety, and anger."
Those retained will be faced with the decision to either stay and work with the organization to process their emotions or leave the organization for a better opportunity. In fact, research shows that downsizing a company by 1% leads to a 31% increase in voluntary turnover the next year. Layoffs create a breach of trust, and employees often feel uncertain about the future (i.e., whether their job is safe or not) and distrustful of the organization and leaders. It isn't too difficult to imagine how employees might feel when a layoff is handled particularly badly – such as when Microsoft buried news about the layoff of 12,500 employees in the 11th paragraph of a lengthy memo.
Moreover, organizations are often scrutinized by remaining employees, future candidates, and customers, all of whom are observing how companies handle difficult situations. Because of this, your organization's brand and reputation can be significantly impacted if difficult situations – like layoffs – aren't appropriately handled with care. According to a Randstad study, after a negative layoff experience, 70% of companies experience a negative impact on future talent acquisition efforts, and 81% report a negative impact on the brand. For this reason, focusing on rebuilding a positive workplace culture is an important part of attracting and retaining the talent that will be key for your organization to experience growth again.
Given these consequences, it's essential to consider how your organization handles the period leading up to the layoff, the announcement itself, and the period following the layoff. Although "empathetic" or "compassionate" layoffs may initially seem impossible, there are ways you can handle this difficult situation with care and in a manner that supports your organization and people.
The do's and don'ts of respectful layoffs
Below are some general do's and don't's to keep in mind when considering the tough decision of laying employees off.
DO listen to your employees
When it comes to your employees' mental health, how you communicate layoffs to them matters because it is an understandably difficult and emotional change to process. While remote layoffs and mass video calls may seem efficient and painless, they make employees feel disrespected, unheard, and undervalued.
One way to support your employees after layoffs is to arrange a personal call with their managers. This applies to both the employees who have been let go and the employees who are staying. Their managers will be able to explain the situation better and genuinely recognize employees' contributions throughout their time with the organization.
DON'T be evasive
If your organization fails to communicate effectively about the layoffs, your employees will start to wonder why their colleagues were let go. Eventually, your organization will foster an environment of uncertainty where your employees will always be on edge as to whether and when they'll be next on the chopping block. This uncertainty can severely affect the team and individual morale, perhaps pushing some employees to leave the organization voluntarily.
Instead, be vulnerable and transparent with your employees as you explain the reasoning behind the tough decision. Employees will be more receptive if they feel like you're being straightforward and honest with them. In addition, providing your employees with a safe space to vent their emotions about the situation will allow you to address any concerns that they may have.
DO provide resources and connections
Transitioning to unemployment can be intimidating and stressful for your employees. Providing your employees with resources and support will help ease the emotional pressure they have on their shoulders. Whether it's maintaining your employees' benefits coverage or offering resume or cover letter support, your actions can show affected employees that you want to see them succeed, even if it's not at your organization.
In addition, employees who have tenure in the organization will have likely built strong connections with colleagues, managers, and even senior leadership. One great way to support their transition and nurture these relationships is to provide communication channels, such as LinkedIn or Slack, where departing employees can stay in touch. It opens plenty of opportunities for employees to network and even potentially come back down the line.
DON'T force what doesn't fit
Even though there has recently been a lot of negative press around recent layoffs, treat them as learning opportunities. Look at how other companies handle these difficult situations and adopt the strategies that best align with your company's culture and values. Be thoughtful about which companies you try to emulate, as building or implementing layoff strategies that don't fit your organization's culture, and values could further alienate your employees. That being said, transparency, compassion, honesty, and respect are all principles that every employee would appreciate – especially during emotionally difficult situations.
DO embrace feedback
After news of layoffs, both leaving and retained employees are likely still emotionally processing the situation. It's important to allow them to share their experience and voice their concerns. Providing exit surveys can help you learn what worked and how you could better handle similar challenging situations in the future. Once you've gathered your employees' input, proactively address areas of improvement with the feedback provided. By listening to your employees before they depart, you're sending a message to them that you're committed to listening and acting on what they have to say.
Learn faster through feedback with Culture Amp
DON'T neglect your remaining employees
After going through layoffs, your remaining employees may feel disheartened and unmotivated. Surveying remaining employees will help you understand the impact on their experience and engagement. Once you've gathered enough feedback from everyone impacted by the layoffs, it's time to act upon it. Not only will you gradually improve your employee experience with your insights, but you can also rebuild trust and offer support to help your team as they grieve the loss of their colleagues.
Even if your organization isn't currently undergoing layoffs, proactively training managers will help them better support their employees/teams through potentially difficult situations in the future. You can also take other steps to help your remaining employees adapt to the "new normal" after layoffs, such as increasing recognition, increasing opportunities for ownership,
Moving forward after layoffs
Managing layoffs and downsizing is never easy or comfortable, but it's imperative to handle them thoughtfully from start to finish when it is unavoidable. The effects of layoffs will likely be widespread for both employees and the overall organization. Still, the impact can be mitigated if you are proactive in supporting and listening to your employees and utilize feedback to identify areas for future and immediate improvement.