Potential waves of redundancies: Strategies great employers use to avoid losing trust

Layoffs are a painful reality for many organizations, especially in times of economic downturn or major changes within the industry - such as tech and financial companies recently tightening their belts.

Employers usually resort to layoffs in crisis situations to save money. Many organizations still see downsizing as the most efficient and easiest way to overcome financial challenges, even though it has a significant impact on organizational culture, productivity and, most importantly, trust.

Dismissals are a difficult and emotional process for both employers and employees.

According to a Article in the Harvard Business Review the long-term impact on the health and finances of those affected (according to experts, it takes an average of two years to recover from the psychological trauma of losing a job), the negative impact on the company itself (i.e. poorer performance following a wave of redundancies) and the loss of trust are undeniable. Employees feel betrayed, insecure and distrustful, which can lead to a number of negative consequences for the organization.

In this article, we look at the impact of redundancy on trust and give some tips on how to maintain trust during and after the process.

The consequences of redundancies for trust

Layoffs can cause the remaining employees to question their trust in their organization and their managers. Below are some common effects of redundancies on trust:

1. Insecurity and fear: Layoffs cause a sense of fear and uncertainty among the remaining employees as they wonder if they will be next. The fear of losing their job can make employees feel insecure about their future with the company. This in turn can lead to a loss of trust as employees feel that their organization is not looking out for their best interests.
2. Distrust of the management: When employees witness their colleagues being made redundant, they may begin to question management's decision making. As employees may feel that their managers are not transparent about the reasons for the redundancies or are not fair and empathetic in their approach to the process, this can lead to a mistrust of management.
3. Declining morale: Layoffs can have a significant impact on morale, as remaining employees may feel discouraged, devalued and demotivated. This can lead to a decrease in productivity and innovation as well as an increase in turnover, further undermining trust in the organization.
4. Lower loyalty: Layoffs can also reduce employee loyalty as they feel that their organization is not loyal to them. This can lead to a decrease in commitment to the employer, which further weakens trust.

Despite the potentially negative impact of layoffs on trust, there are strategies you can use to maintain trust during these difficult times and preserve your culture of trust.

The moment to prove your culture

Even the best employers are not immune to these economic challenges.

"Layoffs are part of the business, even the best employers go through them at some point. Nobody wants it to happen, but sometimes it has to".

Patrick Mollet, co-owner and consultant at Great Place To Work®

The way organizations handle layoffs says a lot about how great employers differ from merely average ones. A great employer finds ways to take care of its employees, even if they (have to) leave the company.

Restructuring is a turning point for organizational culture. Whether it's a merger, acquisition, divestiture or downsizing, the way an organization deals with change will impact its culture for years to come.

We strongly recommend reviewing your options before making any redundancies. Have you tried everything when it comes to performance management and increasing productivity?

Did you know? 84 % of employees in great workplaces believe that management sees layoffs as a last resort, compared to 67 % in average workplaces.

This is how great employers deal with redundancies:

Strategies for maintaining trust during and after layoffs

Our data reveals strategies used by the best workplace cultures to minimize the impact of layoffs on employees and the employee experience. The approach can be divided into three phases: before, during and after the layoff.

1. before dismissal

When rumors are circulating about possible layoffs, effective communication and clarity are key. Employees must be in no doubt that redundancies are a last resort.

Managers need to make sure that employees understand that layoffs are a last resort and that cost-cutting measures were considered before a decision was made. If you have not cut costs in other areas (travel, expensive events or even executive bonuses), your employees are likely to resent you, even if they are not affected by the layoffs.

Be honest and clear about the situation and keep everyone regularly informed about the next steps.

Asking employees for suggestions and input on cost-saving measures can also give them the feeling that they are in control of the situation. However, this is only effective in organizations that have internalized a "For All™" culture, where everyone feels empowered to innovate and contribute their ideas.

2. during a discharge

Organizations should approach layoffs with compassion and empathy for those affected.

The best employers have proven to go the extra mile to personalize messages, optimize benefits for affected employees and even help them find new employment opportunities.

Showing care also means thinking about how a layoff might disproportionately affect underrepresented groups and conducting a careful analysis. Leaders should resist the urge to limit the discussion about downsizing to a few executives, because by broadening their focus to include more people, they can make better decisions from a diversity, equity and inclusion perspective.

Caring organizations sometimes even keep the lines of communication open so that team members can be rehired when the market situation improves.

3. after a release

Great employers make sure they involve the remaining employees who may be grieving or have to take on extra work due to the downsizing. If the moment is not met with empathy, trust will be destroyed.

By giving employees the opportunity to express themselves and identify with the purpose of the organization, trust can be restored. This measure is neither expensive nor complicated, but requires the willingness of managers to ask questions, listen and create space.

As a manager, you should also be prepared for strong emotions while employees process what has happened. Allow employees to process their feelings and offer them the support they need.

In summary, layoffs are a difficult situation for both employees and management and can have a significant impact on trust within an organization. By communicating transparently and regularly, investing in remaining employees and taking steps to rebuild the trust of those affected, organizations can minimize the negative impact of layoffs and develop a stronger, more resilient workforce. By prioritizing empathy, compassion and open communication, organizations can create a culture of trust and support that benefits both employees and the company as a whole.

Especially during a crisis, it is crucial to feel the pulse of the employees. One Employee Survey can provide valuable insights. Benefit from our internationally established methodology, industry benchmarks and our survey platform: