Protect your employee experience and brand during layoffs 

The trend that first took root in the technology and financial sectors has spread to retail, media, hospitality and beyond. The strategies and communications relating to layoffs have been called into question when there is dissonance with brand values — or plain missteps. The storm that follows causes reputational damage and often operational issues in the near and longer term. In one instance, an employee from a high-profile brand said, “I’m not on the list [of layoffs], but seeing the way my colleagues have been treated means I’m now on the list of three competitors — give me a few months and I’ll be out of here.”

At the end of 2022, more than half (57%) of executives said they planned to let people go in 2023, according to Mercer’s Executive Outlook survey. Most of these businesses are conducting reductions in force (RIFs) to strengthen their organisation’s resilience, accelerate transformation and bolster growth. In fact, nearly two-thirds (59%) of CEOs and CFOs predicted heightened demand in 2023. At the same time, many were primed to reshape their workforce for what’s next, with half planning to increase their hiring budget.

Clearly, the affordability of talent is feeding into decision-making; of the executives who intended to increase recruitment, a third expected to take a more targeted approach this year, in part to counteract talent inflation. Rightsizing also rebalances the accelerated hiring of the COVID-19 pandemic, where some businesses overshot future demand. On top of this, there is no doubt that the advent of widespread AI use, especially generative AI, is feeding into some of the workforce modelling.

Despite this fresh thinking about future ways of working, too few businesses are applying a skills lens to the talent they are losing when conducting divestitures, retrenchments and restructures. And many are lagging in using agile ways of talent sharing to meet future demand; a limited number of businesses leverage an internal marketplace to facilitate talent mobility across the organisation.

Responsible employers will consider alternative measures such as furlough or redeployment before implementing layoffs, but transformation often necessitates restructuring and RIFs in multiple parts of the company. No matter the business reason for layoffs, well-established corporations that were once deemed recession-proof are making decisions that have repercussions for their people and, if managed poorly, their reputation. Balancing empathy with economics is a juggling act worth getting right.

In a tight labour market and against a harsh economic backdrop, brand reputation is a fragile thing. Businesses that have missed the mark have been called out publicly and won’t be easily forgiven.

So, who is getting it wrong? Some employers closed their offices, opting to announce layoffs entirely remotely, suppressing the news from the rest of the workforce. Those with a hybrid working model laid off some individuals face-to-face and others virtually, creating a fractured experience. Other communications were emotionally detached, as layoff notifications came via personal email or a generic message — both of which missed the mark. In some cases, people learnt of the job cuts when they were unable to log in to their corporate accounts or access their office. Others were reassured that there would be no layoffs after an initial cost-cutting exercise — only for swathes of people to lose their jobs shortly after.

The examples above smack of poor strategic workforce planning and ill-advised communication. In scenarios like this, the good work of nurturing an open relationship with employees can be undone in days. The resulting fallout escalates quickly (and publicly) on social media and company review sites. As digital natives, 60% of Gen Zers in the UK and US use social media as a news source, according to Oliver Wyman’s A-Gen-Z report. The bad practices witnessed in some acts of downsizing fuel viral content, each story a match that lights the next. The online inferno comes back to burn the businesses in question, hitting public perception and shrinking the potential pipeline of talent who might be interested in joining the firm in the future.

So, who is getting it right? One company created alumni email addresses for their leavers, so people could connect, ask questions, or simply share words of support. Others invested in digital outplacement services for every employee. A few set up “job shops” in-house so that they could have real conversations about their future. One CEO took a 98% pay cut after laying off workers in an act of accountability. Another posted a directory of the employees who were leaving and reiterated their contributions and talent to encourage other companies to snap them up. These leaders prioritised employee dignity in their layoffs, with many seeing the resultant stories go viral in a positive light.

While there’s no set formula when it comes to layoffs, it is vital to adopt a socially responsible mindset and communicate decisions in a people-centric way.

Communication-wise, these three things can help:

• Give employees forewarning (including following any legal obligations) so the decision doesn’t completely pull the rug out from under them. Balance this by ensuring information isn’t shared so far in advance that employees feel anxious without a clear idea of timelines.
  
  
• Clearly outline the rationale behind the decision and think about your employees’ futures — and what role you as a leader can play in setting them up to manage the change.
  
  
• Aim for one wave of redundancies underpinned by solid workforce planning. Ensure that there is a strategy for communicating with the people who have not been directly impacted by the layoffs. 

Brand resonance and authenticity have never been more critical. Many companies are making public commitments to safeguarding well-being and maintaining people’s employability (the Good Work Initiative is one example). While there is a significant upside to making public commitments that follow the principles of Good Work and DEI, if actions at the end of the employee life cycle fail to uphold those commitments, companies expose themselves to criticism. 

Some employers opted to cut internal communication channels to avoid too much discussion after announcing layoffs. This drives conversation underground when emotions are high and people’s sense of self is shaken. The knock-on effect is that the impact is magnified, creating a bigger digital footprint as employees turn to public forums as an outlet. There are nuances here to be mindful of when it comes to employee well-being. For some individuals, receiving the news that their job is no more over a video call may exacerbate feelings of isolation; for others, being at home may feel more comfortable. Training managers on how to deal with layoffs can make a significant difference.

When the dust has settled from this current wave of disruption, there are lasting repercussions for businesses as they heal and rebuild. Layoffs can be destabilising and erode the trust a leader has carefully established with their people. Damaged trust has broader implications for company culture, salary perceptions and employee engagement. In today’s climate of responsible employment and employee activism, ‘layoff survivor guilt’ is essentially a break in the psychological contract for those left behind. It’s not just guilt — people will be overwhelmed, grateful, relieved, angry, disengaged and ashamed. When these feelings go unrecognised, research shows the workforce is less productive.

In this era of burnout and energy depletion, those who remain with the business can be left with higher workloads if intentional work design isn’t implemented as part of the RIFs. This inevitably leaves people feeling undervalued, making them more likely to walk out the door themselves. Research from Trevor and Nyberg found a 31% increase in people voluntarily leaving their jobs a year after a workforce was downsized by 1%. Ensuring business goals are realigned with work allocation is critical.

Proactively addressing the ripple effects of layoffs, both for individuals and your business, will better protect the energy and trust of the remaining workforce while minimising risk factors — both to business continuity and brand. For many companies, rightsizing is critical for future sustainability. Actioning this with a skills-focused outlook and an empathic approach will stand you in good stead. 

In summary, how you conduct layoffs says a lot about your employer brand. Implementing them with empathy and transparency means your people feel cared for, even in the aftermath of difficult decisions. In a world where we are all connected and work is perpetually evolving, staying relatable, even as people exit, is not only a brand imperative — it’s a business essential.