Layoffs can be destabilizing to company culture. Leaders have to make painful decisions about which staff to let go in order to keep the company competitive (or even afloat) during change. But if cuts are implemented incorrectly, they can cripple trust between management and employees, with staff wondering if they’re next or whether the company they work so hard for even cares about their well-being.
A recent study by ResumeTemplates.com of 1,000 U.S.-based managers found that 45% of companies are likely to lay off employees in 2025. These businesses cited economic difficulties, industry-specific challenges and AI/automation developments as major drivers behind their decision. The Future of Jobs Report from the World Economic Forum found that 41% of employers see layoffs in the future due to “skills obsolescence,” as well.
Though layoffs appear to be coming for many companies, they don’t need to be an event that puts a business’ ethos in jeopardy. To avoid destabilizing—and demoralizing—your workforce, implement with intent.
Communicate at every stage
Kyle Elliott, Ed.D., M.P.A., C.H.E.S., a career coach in the tech space and mental health expert, says that transparency and honesty should be at the forefront for managers—before, during and after layoffs. “As a manager, one of the most important things you can do during layoffs is to remain transparent and honest,” says Elliott. “Trust is easy to destroy but incredibly difficult to rebuild.”
He suggests that managers who are doing the layoffs be clear on the message the executive(s) want to share before the conversation even starts. “You don’t want to have mixed communication…. So [get] clear about what is the communication that we’re all going to be sharing internally and then usually externally,” he says. He also suggests managers reach out to peers who are also conducting layoffs and be clear on talking points—or even just open up about the difficulties they’re facing personally.
Elliott adds that managers should have an awareness of how communication between the managerial/executive level and staff will appear. If one-on-one meetings or town halls are never called unless negative news is coming, calling them can create a culture of fearful communication, which will only be exacerbated when layoffs are announced.
Instead, Elliott recommends making transparent communication of both wins and losses a regular occurrence. “I think it’s laying that groundwork where there’s that stronger culture,” he says. “You have that safety net where… you’ve kind of poured into employees and where you’ve built that trust with them—you’ve built those relationships.”
Respect your people
Leslie Hansen, founder of the corporate consulting company Leslie Hansen & Associates, understands the nuances of laying off employees while keeping company culture intact. As a VP of operations for a manufacturing company in 2007—the beginning of the Great Recession—she was tasked with laying off over 120 employees who, then, had to train their replacements due to a factory moving offshore.
Hansen created a plan that didn’t erode employee respect by finding out their needs and then lobbying for them. She retained an outside consultant for advice and then researched approximately how long it would take each employee to find a new position. She continually advocated for her employees to be paid out a runway amount rather than severance based on tenure.
“I was asking for more money to do this layoff than what had been budgeted, and so I just lobbied the heck out of the CFO, who also had been in operations and understood the risk of having everybody just bail,” says Hansen. Thankfully, the CFO agreed with her direction.
Her final step was to communicate the change to the affected workers—arguably the hardest part. She took a counterintuitive approach that gave the employees power over their jobs. “[I told] them… If you’re willing to stay, then the company will buy that time from you, the time that you need. So… at the end, you’re going to get this money to pay for that runway for you to have time to look for a job. And it’s up to you. It’s… a business proposition. You can stay and have that runway bought, or you can go,” she recalls.
Though the plan was halted by company executives at the last minute, Hansen’s experience proved to be valuable for years to come.
“The common denominator around all of that (layoff plan) is respecting the dignity of people,” she says. That’s… the DNA of any approach that doesn’t just destroy your culture.”
Don’t forget about those who made the cut
Throughout her time as a researcher, consultant and professor, Denise Rousseau, Ph.D., HJ Heinz III professor of organizational behavior and public policy at Carnegie Mellon University, has found one key issue plaguing corporations that lay off employees without proper execution.
“The key idea is, first and foremost, if you’re trying to retain people that you’re not laying off and [retain your] culture, is [to] have a very clear explanation for why you laid off their colleagues” she says. “This is one of the factors that is regularly omitted by companies.”
Rousseau noticed that the employees who remain after downsizing operations are kept in the dark about the motivation and rationale for the cuts, because the focus of the executives is in the wrong place: the laid-off employees.
Instead, she recommends managers conducting layoffs offer survivors—a term she and other researchers in the field use to characterize employees who remain after staff cuts, due to the losses they have experienced—airtight and clear explanations as to why cuts occurred.
“Make the logic of that [decision] very clear and then talk about next steps, because you have to give people who’ve been hit with huge traumatic effect, a sense of a plan and… reduce their uncertainty about what will happen in the future,” she says.
Figure out—or rediscover—your “glue”
Executing staff cuts without eroding staff perception of a company is one challenge, but navigating the fallout afterwards is quite another.
Companies that want to maintain what sets them apart and to continue past a layoff, both internally and externally, might need to discover what their corporate fingerprint looks like after a restructuring.
Rousseau has advice for companies seeking to find out or rediscover what their corporate glue is after layoffs: reach out to staff. Just talking about what makes the company great amongst managers won’t necessarily do the trick.
Rousseau highlights the need for authentic conversation as the key element required for success, drawing on the work of her colleague retired Harvard professor Michael Beer.
“There’s no way around [it], if you’re trying to retain…[the company’s] culture…directly obtain information from the people you seek to retain,” she says. “Since many companies don’t do this, they will really be delighted that you’re talking with them.”
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