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March 29, 2023

Handling Layoff Uncertainty for Your Employees

According to a new survey of recently laid-off workers, more than half said they had no idea they were about to lose their jobs.

Being laid off can be traumatic. There’s the financial uncertainty, as well as the loss of identity, purpose and structure that can come from work. Layoffs are even a source of distress for employees who remain in their jobs and managers, too.

Mental health researchers have identified best practices to reduce mental stress in employees losing their jobs and those who remain — and a surprise layoff is not one of them.

In fact, offering plenty of advance notice is part of a supportive transition.

What Employers Need to Know

It’s crucial to understand that the pain from layoffs is felt throughout your organization.

  • Feeling uncertain about job security over a long period of time is even worse for a person’s mental health than being laid off.
  • Stress-related illnesses have been shown to be 50% higher in companies that have downsized their workforce, compared to other companies.
  • Burnout among remaining employees is twice as high at downsized companies.

Recommendations for Communicating About Layoffs

Fairness and a sense of control are essential psychological principles for your employees during layoffs. Here are three steps, backed by research, to put those principles into action as you support your teams through a transition:

Let employees know early on what’s happening.

Speaking openly with employees about your company’s financial picture gives you an opportunity to ask for their ideas for alternatives to layoffs. These might include furloughs, a four-day workweek, voluntary buy-outs or internal reassignments. 

  • Apple has reportedly avoided layoffs that have swept much of the tech industry, and is instead delaying bonuses, streamlining travel and other expenses and leaving vacant positions unfilled.

If layoffs remain unavoidable, an honest exploration of the alternatives will help your employees accept the reasoning behind the decision. Feeling like the process was fair reduces problems like wrongful-termination lawsuits, high turnover in remaining employees and theft of employer property.

Ample warning of layoffs gives employees who are losing their jobs a long runway to figure out what’s next — and for employees who remain, it demonstrates that you care. 

  • Nokia gave employees a year’s notice of a restructuring in 2011. During that time, the company helped employees find new roles internally, get new jobs elsewhere or even start a business.

Let employees “talk it out” with you — and listen actively. 

Inviting employees to come to you to discuss their concerns about looming changes in the workplace allows them to process what’s going on around them and figure out on their own how they can cope. You can especially empower them through active listening. Active listening is a skill that takes many forms—and lots of practice. A few basics:

  • Listen more than you talk.
  • Give people your full attention (step away from your computer and phone).
  • Let them fill the silence.
  • Don’t jump in with what you think.
  • Show an interest.
  • Reflect back what you’re hearing.

Offer supportive benefits to ease the transition.

Feeling equipped with resources for their next step is core to people’s sense of fairness in a layoff. For those being let go, consider severance pay, an extension of health and mental health benefits, career coaching, access to recruiters (including your own HR teams). Offer—or even do it without being asked—to write a letter of recommendation for a member of your team. Create an opt-in list of employees looking for work and share it with business partners in your company’s network.

Based on what psychologists know about loss and grieving, employers should not try to speed through a layoff. After a layoff, check in with your teams on their mental health. Remind them of available counseling services through your EAP, or even make a counselor available in person. Business leaders should also check in on managers who have to deliver the bad news of layoffs as that responsibility may bring its own distress.