Layoffs and reductions in force can be an unavoidable part of business and may happen for any number of reasons, including a drop in sales or economic uncertainty. In most cases, this has nothing to do with how well your team members are performing. Rather, it’s often done to minimize operational expenses or to meet another key business need or goal.

The way you handle this unexpected transition for your team members can impact your company for years to come. Disgruntled former team members can irreparably damage your employer brand, making it difficult to attract talent. Remaining team members may feel expendable, negatively impacting employee engagement, productivity, and retention. 

Company downsizing and layoffs need to be done appropriately so departing team members leave on good terms and remaining team members maintain morale following the transition.

Build a structured offboarding process

A structured employee offboarding process can help you transition departing employees in a strategic, efficient manner. This is particularly important when you’re offboarding a larger number of employees than usual because you don’t want to inadvertently leave out important steps. 

For example, your offboarding process should include:

  • Hosting a one-on-one conversation to explain the decision, answer questions, and honor your departing team member’s contributions
  • Sharing next steps, including equipment returns and final paychecks
  • Reassigning direct reports and work responsibilities
  • Completing paperwork such as a severance package and written termination letter
  • Deprovisioning accounts

A formal offboarding process can help ensure a smooth transition during a challenging time so you can end this phase of the employee lifecycle on a high note.

Communicate clearly and openly

It’s best to deliver news of a layoff in a personal, confidential, face-to-face meeting with each individual departing team member. Be transparent about why the position is being eliminated and discuss resources available that will help ease the transition. 

Give your departing team member time to respond and ask questions— and keep in mind that each person is unique and may react to the news differently. Some may ask for more detailed information, some might cry or become angry, and others may need more time to contemplate their sudden departure. Giving adequate time and space for your team members to process their thoughts and share their feelings can make a big difference in their ability to move forward. 

News of involuntary turnover can travel quickly, and your remaining team members may begin to question your organization’s stability and their prospects for the future. This can affect future turnover. Forty five percent of workers who feel they have little or no job security in their current position say they may look for new employment. Make sure you communicate about downsizing and layoffs with the rest of your team to help them understand why it occurred and what it means for them. 

Reallocating job responsibilities

There may be gaps in your workforce following downsizing and layoffs. Reallocate job responsibilities and train your remaining team members so they’re set up for success in their expanded roles. 

But be careful not to ask too much of your remaining team members. Forty percent of workers report their own workload increasing due to high employee turnover, which has led to an increase in stress levels and feelings of burnout in 78% of workers. Keep the lines of communication open so you can collect feedback, adjust as needed, and maintain employee morale and engagement. 

You might also consider salary reviews based on changes to workload and responsibilities, but it’s important to do this tactfully. It may come across as irresponsible and insensitive if you let go of some team members for financial reasons and immediately increase pay for others.

Final thoughts on company downsizing and layoffs

Managing layoffs and other forms of company downsizing is never easy. You don’t know how each of your team members will react to the news, whether they’re included in the group being let go or not.

But if layoffs are handled appropriately, you can create a smooth transition for your team members that extends the employee experience into this next phase of the employee lifecycle. This can enable departing employees to leave with a positive, lasting impression of your company. And it will enable your remaining team members to maintain employee morale and productivity so they can focus on their goals and the future success of your company. 

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Handling Company Downsizing and Layoffs Appropriately