Layoffs can be one of the most challenging aspects of leadership. You care about your employees and your workforce, but you’re also responsible for maintaining your bottom line. It may feel like an impossible decision to make.
“Layoffs are just a massive hit to employee morale and engagement,” says Jennifer Dulski, CEO and founder of Rising Team. “People get scared they might be next.”
The right approach can help you navigate layoffs effectively and compassionately. Below, ten business leaders share their advice for handling layoffs effectively and with grace.
1. Transparent Communication
Transparent communication reduces uncertainty and demonstrates respect for employees’ dignity. It also prevents miscommunications that may convolute the layoff process.
“Leaders should openly share information about the reasons behind the layoffs, the criteria used for selection, and the company’s future outlook,” advises Mara Dumski, Chief Fragrance Experience Officer at Pura, a company known for their smart fragrance diffuser. “By being honest and forthcoming, you can help employees understand the rationale behind hard decisions and feel more empowered in navigating the changes.”
Additionally, transparent communication allows employees to better prepare for the impact of layoffs and reduces the likelihood of rumors or misinformation spreading within the organization. These tactics feed a culture of honesty and integrity, which is crucial for maintaining morale and preserving the employer-employee relationship.
2. Prepare Thoroughly
Firing employees requires careful planning, empathy, and adherence to legal and ethical considerations. To begin, ensure you have a clear understanding of the reasons for the termination, whether it’s due to performance issues, organizational restructuring, or other factors. It’s crucial to gather evidence and documentation to support the decision, including performance evaluations, warnings, and any relevant policies or contracts.
“Carefully consider the logistics of the termination, including the timing, location, and who will be present during the meeting,” recommends Justin Soleimani, Co-Founder of Tumble, a company known for its rugs. “Of course, approach the conversation with empathy and respect, providing support to employees as much as possible.”
It’s essential to ensure compliance with legal requirements, including providing any necessary notice periods, final pay, and information about benefits continuation or COBRA rights. Understanding these requirements before the layoffs begin can mitigate negative impacts on the departing employee and the remaining team while upholding the organization’s integrity and reputation.
3. Empathetic Approach
Leading with empathy during layoffs is compassionate and essential for maintaining trust, morale, and organizational resilience. Empathy requires understanding and acknowledging the emotions and experiences of the employees being terminated and those remaining.
“Layoffs are a decision that profoundly impacts the lives and livelihoods of employees,” says Greg Hannley, Founder and CEO of Soba Texas. “It’s important for leaders to put themselves in these employees’ shoes and recognize that impact.”
By leading with empathy, leaders can create a supportive environment that validates employees’ feelings, fosters open communication, and provides a sense of dignity and respect throughout the process. Demonstrating empathy sends a powerful message to the remaining staff, reinforcing the organization’s values and commitment to its people.
4. Provide Resources
You can help mitigate the blow of being laid off by providing affected employees with resources to help them navigate the transition and support them in their career journey. These resources may include career counseling services to assist with resume writing, job search strategies, and interview preparation.
“Every layoff scenario is different,” says Andrew Meyer, CEO of Arbor. “If the layoffs are happening due to company-wide policy changes, it’s vital to continue to provide resources and support to those employees even after termination.”
How you lay off your workforce sends a message to those left behind. Equipping laid-off employees with access to networking opportunities, information about unemployment benefits, and emotional support resources, such as employee assistance programs or counseling services, will demonstrate your commitment to employee well-being and foster trust among your remaining workforce.
5. Fairness and Equity
Another reason transparency is integral to handling layoffs is because it helps ensure the situation is handled with integrity and fairness. You can facilitate this by establishing clear criteria and guidelines for selecting employees for layoff based on objective factors such as job performance, skills, and business needs.
“Any form of bias or favoritism in the layoff selection process should be avoided at all costs,” says George Fraguio, Vice President of Bridge Lending at Vaster. “Transparency is key here. Communicate openly about the criteria used for selection, and provide employees with an opportunity to ask questions and seek clarification.”
During the layoff conversations, approach each employee with empathy and sensitivity, acknowledging the impact of the decision while also ensuring clarity and consistency in delivering the message. By adhering to fair and equitable practices throughout the layoff process, you can stay one step ahead of feelings of resentment and distrust among employees and uphold the organization’s commitment to integrity and fairness.
6. Offer Severance Packages
Robust severance packages after layoffs are standard in many industries and can help to dramatically cut the sting of being terminated. A typical severance package may include several components, such as a lump sum payment based on length of service, additional compensation for unused vacation or sick leave, continuation of health benefits for a specified period, and outplacement services to assist with job search and career transition.
“Understand your full legal responsibilities for providing severance,” advises Shaunak Amin, CEO and Co-Founder of Stadium. “You may consider going above and beyond in your duties, but at the very least, know your employees’ rights and be sure that you’re meeting the minimum in terms of compensation after being laid off.”
The specific details of the severance package should be tailored to each employee’s individual circumstances and aligned with company policies and legal requirements. Providing a comprehensive severance package demonstrates a commitment to treating departing employees with dignity and respect while also helping to mitigate financial and emotional stress during this challenging time.
7. Maintain Confidentiality
Maintaining confidentiality during layoffs preserves the dignity and privacy of the affected employees, preventing unnecessary speculation or gossip that could exacerbate their stress and anxiety. Plus, confidentiality helps to maintain a sense of trust and morale among the remaining staff, as they see that the organization respects the confidentiality of sensitive information.
“Establishing clear protocols and guidelines for handling sensitive information related to layoffs ahead of time can go a long way towards maintaining discretion during the process,” recommends Scott Chaverri, CEO of Mito Red Light, a company that specializes in red light therapy devices. “This process may include limiting the number of individuals involved in the decision-making process, as well as communicating the importance of discretion to all employees who are privy to the information.”
You should also emphasize the importance of confidentiality during layoff conversations and provide guidance to remaining employees on how to respond to inquiries from colleagues or external parties. By prioritizing confidentiality and establishing a culture of discretion within the organization, you minimize the risk of leaks and uphold the integrity of the layoff process.
8. Listen and Respond
Taking on an active listening role and incorporating employee feedback into the layoff process is essential for maintaining transparency and addressing any concerns or questions that arise. One effective approach is to establish designated channels for employees to share their feedback, such as anonymous surveys, feedback sessions, or open-door meetings with HR or leadership.
“Feedback channels provide employees with a safe and confidential space to express their thoughts, feelings, and suggestions regarding the layoff process,” explains Francesco Gatti, CEO of Opensend. “Beyond that, actively listen to employees’ feedback with empathy and openness to demonstrate a genuine interest in understanding their perspectives and addressing their needs.”
Active listening may include responding promptly to inquiries, providing clarification on any uncertainties, and offering support or resources to alleviate concerns. The underlying principle of ensuring that employees feel heard, respected, and valued ultimately creates a more transparent and inclusive organizational culture.
9. Support Remaining Staff
When conducting layoffs, there are two key stakeholders you must consider: the employees being terminated and your remaining workforce. Supporting remaining staff during layoffs is crucial for maintaining morale, productivity, and a sense of stability within the organization.
“Refusing to acknowledge the impact of layoffs on remaining staff can exacerbate anxiety and uncertainty in your organization,” warns Cody Candee, Founder and CEO of Bounce. “On the other hand, openly communicating changes to the team’s structure or workload can improve morale and motivation.”
Create opportunities for open dialogue and feedback, allowing employees to express their concerns and ask questions. You may also consider offering additional training or resources to help the remaining staff adapt to new roles or responsibilities.
10. Focus on the Future
Focusing on the future helps instill a sense of hope, resilience, and direction in the present’s uncertainty and challenges. By emphasizing a forward-looking mindset, leaders can rally their team around a shared vision and purpose, reminding them of the company’s long-term goals and aspirations.
“Layoffs tend to create a sense of fear and uncertainty around the future of a company,” says Maggie Brown, Founder and CEO of Recess Pickleball, a company known for its pickleball paddles. “It’s critical for leaders in these times to convey confidence in the company’s ability to weather the current storm and emerge stronger on the other side.”
This forward-thinking approach helps to maintain morale and engagement among employees while reinforcing an essential sense of optimism and resilience.
Layoffs Require Leadership
Navigating layoffs effectively and compassionately requires strong leadership, empathy, and careful planning. You need to rise to the occasion, no matter how uncomfortable it may be.
Tony Robbins, American author and coach, advises, “Stay committed to your decisions, but stay flexible in your approach.”
A similar mindset to Robbins’s can help mitigate the stress of handling layoffs in your organization. By following these ten tips, leaders can help minimize the impact on employees while positioning the company for long-term success.
All the photos in the article are provided by the company(s) mentioned in the article and are used with permission.
