In 2022, high-profile layoffs at tech giants such as Google, Meta, and Amazon captured headlines and attention. It may have been easy for some to dismiss the layoffs as unique to the industry, which does seem to endure periodic shake-ups, but other organizations more quietly let workers go as well.
By late April 2023, job cuts had increased by nearly 400% from the same period in 2022. While the tech industry still led the way with the most layoffs, the financial, health care, and retail industries also made record cuts.
Companies have many potential reasons for laying off employees; they may want to cut costs, improve profitability or stock prices, eliminate duplicate positions after a merger or acquisition, or reset resources after a shift in strategy or direction. Those reasons may look smart on paper where the numbers show an improvement on the bottom line, but in reality, layoffs often don’t lead to the intended outcome. Leaders forget to factor in the costs associated with severance or rehiring workers when conditions improve, and the idea that cutting staff will lead to a bump in profitability or valuation has been debunked by decades of research.
But perhaps even more importantly, laying off workers can lead to hidden costs and consequences that hurt organizations in the long run. In a post-layoff environment, the workers left behind are more likely to quit voluntarily—especially in an overall economy that still has a surplus of jobs. Layoffs, especially in the tech industry, can disproportionately impact underserved communities. And employees left behind are likely to be less engaged and more distrustful of leaders, which can lead to poor business results.
When a company has experienced layoffs, recovery begins with leaders working to rebuild trust with employees. Here are three strategies to rebuild trust in a post-layoff environment:
1. Increase Transparency
When leaders are perceived as secretive, rumors will begin to spread. Secrecy destroys trust. It’s likely that employees who remain in the company will have contact with those who were laid off, and when leadership loses control of the company message, they’re allowing other messages to take hold and spread, which can lead to low morale and increased turnover.
Whether your company has endured a large layoff or a small one, it’s vital that those employees who remain get as much information as possible about why the layoffs occurred, what the strategy for recovering and moving forward will be, and what other measures the company is taking to meet the challenges of the business. Be as open as possible with everyone from the top down.
2.Communicate, Communicate, Communicate!
Employees who remain will have many questions, including who will take on responsibilities of those let go, how internal processes and procedures will be handled, and—perhaps most importantly—if more layoffs are on the horizon.
Leaders need to have a plan in place to communicate even before layoffs occur, and they need to engage in conversation with employees about their concerns and challenges. Share new strategies and answer questions. Allow employees to give feedback or ask questions in an environment of psychological safety, and respond to that feedback and those questions openly.
Remember, there are two levels in every conversation—the content level and the relationship level. While content is vital to addressing employee concerns after a layoff, it’s only the top part of the conversation. Leaders also need to remember that the relationship level carries much more importance when employees are concerned about the status of their roles.
3.Reprioritize Inclusion
One consequence of recent layoffs is the tremendous hit to DEI efforts at many organizations. Layoffs disproportionately impact women and people of color directly as they are often the most recent hires and, therefore, the first let go. In addition, the earliest targets of layoffs are the functions and departments staffed largely by those communities, such as marketing, HR, and especially DEI roles. These functions and departments are usually the ones responsible for supporting employee engagement and inclusion initiatives. When both the resources to support inclusion and underrepresented populations are let go, leaders send a message that inclusion isn’t important–and that certain populations or employees aren’t a priority.
Uncertain economic times or a post-layoff environment is not the time to deprioritize inclusion. In fact, leaders should re-prioritize inclusion and make efforts to promote DEI in the face of uncertainty.
But many organizations struggle to know how to begin with DEI efforts or where to refocus after a shakeup of some kind (including layoffs). For those companies, organizations like Aleria use a scientific approach that can give organizations a way to accurately measure inclusion and leverage data to drive greater inclusion in specific areas.
Aleria’s approach goes beyond measuring diversity, the most easily measured metric. While important, diversity quotas tend to only emphasize short-term wins—the right number of women in leadership, for instance. Even more, they fail to take into account the day-to-day experiences of employees, access to growth opportunities, and other aspects of an equitable work environment.
Aleria helps organizations develop a truly inclusive workplace, which can lead to greater performance and diversity. With a genuinely inclusive workplace, companies not only attract a diverse group of talent—they retain it. And since the global talent shortage is still going on, despite uncertainty in the economy, companies that prioritize inclusion now will have an advantage over those who don’t going forward.
When layoffs impact women and people of color disproportionately, employees may feel that a company’s commitment to DEI is just for show. Refocusing on inclusion in the wake of a shakeup can help restore trust in leadership and their commitment to creating an inclusive company.
While economy-wide layoffs are often a result of contagion or self-fulfilling prophecy, they nonetheless drive uncertainty and distrust among workers. Whether your organization has experienced layoffs or simply watched as others endure them, improving trust within your organization can help you create a stronger foundation for long-term success.
Self-Check:
- What is one way we can improve transparency on our team?
- What is one way I can improve communication in our organization?
- What is one step we can take to improve inclusion in our organization?
