How to Lead Your Team Through Layoff Uncertainty

Recent economic uncertainty has led some organizations to consider cuts to their workforce -- and layoffs or not, their employees are feeling the impact. Thirteen percent of workers have experienced discussions about potential layoffs in their workplace in 2023, according to a recent nationally representative Gallup survey of more than 18,000 individuals.

This statistic might sound small, but its disruption looms large. The mere mention of layoffs can spark fear in employees, diminish their focus, weigh on their wellbeing and test their belief in their work.

Disruptive Discussions

Discussing possible layoffs and furloughs has wide-ranging effects on employees. When they’ve been part of or heard about these discussions, employees are:

• 60% more likely to feel burned out at work very often or always
• 49% more likely to be watching for or actively seeking a new job
• 44% less likely to believe their organization cares about their overall wellbeing
• 23% less likely to be engaged at work
• 42% less likely to feel a strong connection to their organization’s culture

These disturbances apply to all of your employees, including those you have no intent of laying off and who need to be operating at peak performance to keep the company on track if layoffs do occur.

Your top performers may fear becoming overburdened by picking up extra responsibilities and could doubt their own contributions. Up-and-comers might start focusing on finding another job that appears more stable instead of trying to grow in their current role. Employees of all tenures can be distracted by their fear of what’s to come instead of focusing on getting their work done.

Overall, morale may fall, and employee wellbeing -- in life and at work -- can suffer.

A Thought for Leaders

Leaders, be thoughtful when discussing potential layoffs and furloughs. Ensure that managers stay close to their teams, especially their stars, to reiterate their value and recognize their contributions. While it’s best practice to provide as much notice as possible to workers being laid off, whispers of these decisions before you’re certain can make your most talented employees uneasy and your workforce less productive.

While layoffs are difficult, even for those who remain employed, quality conversations can make a difference for all involved. Thoughtful planning about how you communicate and conduct changes in your organization can ensure you retain the talent you need for the future. Provide context for your decisions and a clear outline of what happens next for employees who stay or go. In all situations, treat every employee with respect -- this instills greater confidence in your organization and keeps processes running smoothly during times of change.