Elizabeth Bille

When communicating layoffs to employees, it is incredibly important to remain compassionate and sympathetic in order to minimize the negative impact on workplace culture. Cost-cutting measures such as layoffs, furloughs, and reducing work hours may be used to ensure survival, but they can have a dramatic and lasting impact on an organization and its workplace culture. Layoffs often lead to increased turnover, burnout, and stress, as well as decreased morale, creativity, and job performance – and even poorer overall business performance – if they aren’t handled well.

Communicating Layoffs, Furloughs, and Reduced Work to Employees

When planning for layoffs, furloughs, and reduced work hours, many organizations focus their attention on logistics and compliance, such as:

  •  providing legally required notices and talking points for meetings
  • adhering to collective bargaining agreements, and 
  • ensuring their plan does not have a discriminatory impact on employees in various demographic groups

These are critical considerations to be sure. But layoff communication that only focuses on the event itself and the people being separated is far too limited in scope. To ensure that a company and its workplace culture can truly weather the disruption that will certainly occur, the plan must also focus on what happens after the event and how to support those employees who remain in (or return to) the workplace. 

Three Steps to Maintaining a Positive Workplace Culture While Making Painful Decisions

When considering how to tell your employees about layoffs, furloughs, and reduced hours, make sure you stay transparent, acknowledge their loss, and provide extra support.

1. Be Transparent About the Process – Optics Matter

An important differentiator in employees’ responses to layoff communication is the perceived fairness of both the company’s decision to use them and the process it followed when implementing them. Of course, the vast majority of employees are unaware of the many agonizing discussions leading up to the company’s decision, or the numerous cost-saving tactics that were implemented in an effort to avoid or delay the need to impact employees’ jobs.  

Not privy to this information, employees may fill in the blanks with assumptions, such as staff were cut as a first, not last, resort. Worse, if employees simultaneously hear that leaders are retaining certain perks, shareholders are receiving dividends, or catered lunch meetings or planning retreats are still occurring, this can cause irreparable damage to employee morale, trust, and engagement.

When communicating cost-cutting to employees, ensure that your layoff, furlough, or reduced work hours plan occurs after (or at least is accompanied by) cuts or delays in non-essential expenditures., and Then, communicate openly with employees about those actions. Be transparent about what other measures were considered or implemented before layoffs, furloughs, or reduced work hours, such as executive pay cuts, discontinued travel, or deferred technology upgrades. Even better, ask employees for their help in identifying cost-saving areas before layoffs or furloughs are necessary; doing so can not only provide creative ideas, but it can also provide employees with a feeling that the company sought their input and involved them in the process — keys to preventing anxiety and promoting future engagement.

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2. Acknowledge the Loss and Allow Employees to Grieve

It is telling that employees who remain employed after a layoff or furlough are often called “survivors” in the business literature. This term is a clear signal that the effects of furloughs and layoffs can cause significant trauma and loss for both individual employees and organizations.

This sense of loss may be particularly strong in organizations that have never experienced these actions before. It is also exacerbated when layoffs or furloughs occur amidst a broader economic, health, or safety crisis involving other personal losses impacting financial security, personal connections, or human life.

While no two employees will experience the same emotions, all employees will need to work through them in their own way at their own pace. Some will keep their reactions to themselves and appear not to miss a beat, while others may struggle, openly expressing concerns about what has happened. It will take time for everyone to process what has happened, adapt, and find new ways of working.

When communicating layoffs, leaders should consider these strategies to help employees cope, driving positive outcomes for both individuals and the business:

  • Be compassionate in the delivery of the layoff communications, openly acknowledging how painful such actions are for everyone. As an example, see Marriott’s CEO’s tearful message to employees announcing layoffs, which has been hailed by many as a lesson in leadership
  • Be open about how you are feeling as a leader, even if that leads to becoming visibly emotional and shedding tears, as we have seen recently by numerous world leaders. While conventional wisdom advises leaders to be stoic when sharing tough news, communicating a layoff, furlough, or reduced work hours plan free of emotion can lead to negative reactions by employees, and impede efforts to move forward constructively.
  • Listen to employees and answer questions as transparently as you can. You may not have all of the answers about what will happen next, but asking employees how they are doing in one-on-one conversations or team meetings — and really listening to what they have to say — demonstrates that you care about them, builds trust, and alleviates anxiety.
  • Counsel managers to avoid labeling employees. By classifying your workforce as team players or agile, versus naysayers or resistant to change based on their short-term reactions, you fail to recognize that employees may simply be moving through the phases of grief differently
  • Do not expect employees to work at one hundred percent capacity for a period of time. Studies show that some loss of productivity will occur after a layoff, due in part to its emotional toll and the new/increased workloads that may follow. Immediately telling employees to not let performance dip or that even more effort is needed not only denies employees the space to positively adapt to change, but can further damage morale, engagement, and productivity.

3. Provide Extra Support to Avoid Burnout 

As employees settle into the post-layoff or post-furlough environment, managers must safeguard against another challenge: employee burnout

Even if layoffs or furloughs were presented to staff as a one-and-done event, employees may continue to feel anxious and uncertain about their future at the company. Will there be more? Who will be next? This may prompt some employees to put their effort level into overdrive to visibly demonstrate their value and contributions to the organization.

At the same time, employees will be tasked with doing more with less, trying to complete their previous tasks and goals — and perhaps take on those of furloughed or laid off colleagues too — while working with smaller teams and fewer resources due to budget cuts. Loss of colleagues can also mean loss of institutional knowledge, leading to inefficiencies and delays. Employees may have to spend time establishing new working relationships just to get their work done.

These pressures can truly take their toll on employees and put them on a path to burning out. To avoid the costly impact of burnout on employees and your workplace culture (as well as the turnover it can cause), provide employees with additional support. Leaders should:

  • Talk with employees about their individual workloads and what support they need to get their work done. Managers can help employees identify alternative solutions if resources have been cut, reprioritize assignments, extend deadlines, or find efficiencies. 
  • Communicate care and concern for the wellbeing of your employees. Check in with employees about how they are managing. Tell them you want to hear from them earlier rather than later if they are feeling overloaded.
  • Watch for warning signs of burnout. Some of the hallmarks include increased frustration, reduced performance, increased absences or tardiness, anxiety, and poor concentration. 
  • Consider communicating a moratorium on future layoffs or furloughs, even if only for a defined period of time. This might reduce employee anxiety regarding when “the other shoe may drop.” 

While it is impossible to completely prevent anxiety, stress, or dips in morale after the implementation of layoffs, furloughs, or reduced work hours, many steps can be taken to minimize their magnitude and lasting effects. Through communication, compassion, and support, organizations can dramatically improve the likelihood that their company and workplace culture will remain positive and intact.

Disclaimer: This information is not intended as legal advice. Please consult with legal counsel to ensure your organization’s compliance with applicable legal requirements.

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