There’s really no avoiding the fact that layoffs are tough, both for the individuals who suddenly find themselves without a job and the organisation they leave behind. Research that followed employees who were displaced during the 2008 financial crisis found that the negative impact of being retrenched touched all aspects of their health, from their physical and mental wellbeing, to their financial and social security. Organisations tended to experience impaired reputation, decreased shareholder value, reduced long-term performance and lower employee engagement.
In this pandemic-induced economic crisis, leaders are having to face into the negative consequences of layoffs as they make difficult decisions to preserve the overall health of their businesses. Yet some firms enjoy increased performance, employee morale, and wealth creation, while some displaced employees jump to better career paths and find increased happiness. The odds, however, are against them. The only way through is for organisations to take a human-centric approach to layoffs, both for displaced employees and those that remain.
Support remaining employees
Remaining employees may well be relieved and grateful to have retained their jobs, but that relief can manifest in unexpected ways. Often employees can suffer from a form of ‘survivor’s guilt’ and may still fear for their own futures, leading to depleted mental health and engagement.
Supporting employees to process these feelings requires initiatives on a few different fronts. First, encourage your employees to undergo counselling to help deal with their personal response. Secondly, help employees to see their future in the business by announcing new initiatives, leadership responsibilities and other opportunities the week after layoffs and giving them control over how they will contribute to that future. Offering a future vision assists employees to recover faster emotionally while also engaging them in their work. Finally, demonstrate to them that they’ll be treated well if they lose their jobs through treating displaced employees well.
Five steps to human-centric layoffs
Understandably, most displaced employees feel immediate pressure to find a new job. This pressure – particularly in a depressed job market – can lead individuals to take the first job they’re offered, even if it’s a step down in position or pay. Rather than offering a positive new start, these decisions can lead people to suffer a longer term hit to their emotional and financial wellbeing.
From the organisation’s perspective, it’s clear that helping displaced employees find their next job is an insufficient ambition. Instead, organisations need to strive to support the whole individual in the wider employment ecosystem.
- Don’t hesitate: We naturally want to protect jobs, but as soon as it becomes clear that layoffs are required, organisations need to act. Acting quickly can free up the cash flow required to properly support remaining and displaced employees. Waiting too long can compromise these efforts.
- Be aware: COVID-19 has created a unique work environment, with most employees working from home. Organisations should be cognisant of how this impacts the delivery of information on layoffs, with many individuals isolated in their homes away from their social and professional networks.
- Offer choice where possible: Voluntary layoffs can reduce the number of people who lose their jobs outside of their control. But where this isn’t an option (or isn’t enough) offer displaced employees choices on the supplemental support they receive beyond the standard transition support.
- Go the extra mile: Go beyond the nuts and bolts of career transition support (like drafting resumes and preparing for interviews) to assist displaced employees to find a new role that fits with their personal vision. This might include skills development or trait-based assessments to help identify the individual’s strengths.
- Don’t just tick the box: Support displaced employees beyond their first role as it may be the second role that cements their transition and restores any confidence lost as a result of being laid off.
In the end, layoffs are about humans, not organisations. Hear more from our experts on how to help your organisation Accelerate Through the Turn, by joining our webinar series.
 Wachter, Song, Manchester (2011), Department of Economics, Columbia University Discussion Paper; Laurence, J, Social Science Research 50 (2015).
 Sucher, J and Gupta, S, Harvard Business Review (May–June 2018); Ursel, N and Armstrong-Stassen, M, Industrial Relations (April 12, 2005).