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How Leaders Can Rebuild Their Teams' Trust After a Layoff

Layoffs can be stressful, but recovering from them can be even more challenging.

By Gustavo Razzetti

April 6, 2023

Five steps to rebuild trust, overcome survivor’s guilt, and regain motivation

Layoffs are unpleasant for all involved, including those who deliver the bad news. Most executives dread laying off people but fail to realize that morale can take a nosedive very quickly: surviving employees feel anxious, insecure, and unappreciated.

Whatever the reason for layoffs, the aftermath is a bigger challenge: research has long shown the detrimental effect on people and organizational performance. Mass layoffs may save money in the short term but create more problems than they solve.

In a study by Leadership IQ, 74% of employees who kept their jobs during a layoff said their own productivity declined. Another study found that downsizing a workforce by 1% lead to a 31% increase in voluntary turnover the following year.

Layoffs can be stressful for employees and managers, but recovering from them can be even more challenging. So, what can you do during this difficult period?

Here are some tips and ideas to help your team recover.

The Morning After – Dealing with Survivor's Guilt

Until the 1970s, mass layoffs were synonymous with corporate failure. Through time, they became a sign of corporate competitiveness. Jack Welch famously eliminated the jobs of one out of every four GE employees. He paved the way for other firms to follow suit.

Mass layoffs create a profound psychological and financial toll on people. Even those who find another full-time job suffer anxiety, self-esteem, and trust issues.

There are times when companies have valid reasons to restructure, but there’s no excuse for doing it inhumanely.

Often companies show their best culture when hiring employees and reveal their worst culture when firing them. CEO Vishal Garg became famous for the wrong reasons. He fired 900 employees in one Zoom call without any warning. To make things worse, he went on a social media rant calling employees “lazy” and claiming they were “stealing from the company” for not being productive enough. Garg apologized too late in the game: he was placed on leave "effective immediately."

How your company manages layoffs has a long-standing effect on survivors, too. A study found that they create a decline of 41% in job satisfaction, 36% in organizational commitment, and 20% in job performance.

While losing one’s job is hard, surviving a layoff is also difficult. It causes confusion, anxiety, anger, and fear. One-third of employees feel guilty about keeping their job while their colleagues didn’t. People quickly shift from feeling safe to experiencing remorse.

It's called survivor’s guilt and it's a real phenomenon. The term refers to the remorse people feel after surviving any traumatic event, like a massive layoff. The emotional toll creates a long-standing effect.

Survivor’s guilt is a form of post-traumatic disorder that affects genocide, mass shooting, and accident survivors, among others. It leaves survivors feeling sad and guilty, asking themselves why they were spared while others were not. During layoffs, people experience a similar psychological response.

In the workplace, survivor guilt leads to absenteeism, burnout, low morale, distrust, and decreased productivity.

Ignoring these emotions can lead to bigger problems.

Normalize survivor’s guilt by openly addressing its effects with your team.

Acknowledge and deal with any negative feelings as soon as possible. Be open to hearing the good, bad, and ugly from employees. Give them space to express their concerns openly and personally during this grieving time.

Give people time to process their emotions. Research suggests that individuals need to restore the balance of perceived inequity in the case of survivor guilt. They want to compensate for their perceived unfair benefit of surviving.

Remind your team members that their contributions are as valuable now as before the layoff. Maintain open communication and monitor how people are feeling.

5 Steps to Help Your Team After a Layoff – And Overcome Survivor’s Guilt

1. Explain why the layoff happened

A lack of information can be scary to people. Not understanding why a layoff happened can make things worse. As an employee from a top tech firm told me, “I don't know what caused the layoff; I don't understand the logic. This feels like round one and I might be fired on the next.”

It’s vital to discuss the event as soon as possible. Your team will want to understand why it happened. Be honest, but also be clear and concise. Explain the challenges and how the reorg will help the company get back on track.

Managers dread tough conversations because they fear how people will react. However, research shows that the other party is as anxious and afraid as you are. Uncomfortable conversations are difficult for everyone involved, but you must cross that bridge to recover trust. Take the first step.

Acknowledge the people that left and reset the team. Address questions and concerns in the open. This will help employees understand that the decision was not personal and was made for the organization's benefit.

According to our recently-published study, open communication is the top trait of the best workplace cultures. People don’t like bad news, but they dislike being kept in the dark most of all. Layoffs can damage trust, especially if employees feel the process was handled poorly or the company hid critical information.

Transparency reduces anxiety and uncertainty among employees. A study found that employees who received more information about a layoff reported were more satisfied with how the process was handled.

Avoid trying to be the hero. It’s okay to admit you don’t have all the answers. People respect authentic leaders more than perfect ones. Avoid toxic positivity, too – being

cheerful during a crisis can backfire.

During the Gulf of Mexico oil spill, BP employees who were exposed to upbeat messages lost faith in the company and its leaders. However, those whose managers openly acknowledged the crisis and drafted their teams to clean the mess had a more positive reaction. They felt reassured because their bosses were containing and transparent.  

2. Say farewell with dignity

The way organizations say goodbye to an employee says everything about their culture. Most reveal their dark side during hard times. Layoffs are not always fair, often involving talented people who’ve contributed to the company for years. Be compassionate and empathetic.

Empathy is not just about being nice but also authentic. Many leaders get it wrong by pretending to be nice or caring. An analysis of 48 all-staff layoff memos from various companies showed remarkable similarities: leaders like spinning stories to justify their decisions. Two-thirds mentioned a need for greater efficiency – they indirectly blamed the victims.

Most pointed blame outward (economic forces, uncertainty, or slowdown), urged a positive outlook, and rarely used the word “layoff.” Also, leaders sought to connect emotionally but failed to be authentic. Professor Ayelet Fishback told The Washington Post, “Leaders are trying to remind people that they are family members – except that some people are no longer part of the family.”

Saying farewell with dignity requires much more than empathetic words. Departing employees need concrete help, not just “emotional support and love.”

When the pandemic slashed the travel business, Airbnb had to let go of almost 25% of its workforce. Brian Chesky’s open letter to all employees exemplifies transparency, humility, and care. The CEO owned the impact of his decision and provided help.

Airbnb offered a package that provided severance, reduced caps so everyone could claim their equity shares, extended health benefits, and created an Alumni Talent Directory to help people find a job. The company took matters into its own hands, being helpful and not just compassionate.

How you treat people during a layoff is how survivors think you’ll treat them. Say farewell with dignity. Even a simple LinkedIn recommendation or job referral can go a long way.

3. Rebuild community, rebuild trust

Layoffs can lead to many emotions, including paranoia and distrust among team members.

Losing a job is a traumatic event. 85% of respondents to Edelman’s 2022 Trust Barometer rated job loss as their top concern. Layoffs break the fundamental trust contract between employers and employees: no matter how well you do your job, you can still get fired.

Keep the human factor at the forefront. Your team will feel the loss of friends, colleagues, and trusted experts. These people have worked hard to make your company successful – they deserve respect and kindness.

After a layoff, people often feel as if they no longer belong. In our study, 71% of executives said that fostering a sense of belonging and feeling part of a community is vital for team success. People want to work with great professionals – both personally and professionally. When team members are fired, trust is lost.

The best way to rebuild belonging is by emphasizing continuity. A new study by the Academy of Management offers advice against common assumptions. The best way to talk about change is to focus on what’s not changing.

When people are laid off, it affects the team’s identity and emotions. Fear of uncertainty, losing control, and extra work turn defense mechanisms on, moving people into survival mode. Leaders can overcome this knee-jerk reaction by establishing a vision of continuity.

Reinforce a sense of community by reconnecting to the team’s purpose: why your team exists and the impact it creates on the organization and beyond. Reignite the passion around existing projects and serving your customers. Emphasize the strengths and capabilities of the remaining team members. Inspire people to continue doing great work.

To rebuild trust, create opportunities for connection and development. Avoid rushing to focus solely on the work; make time for strengthening interpersonal relationships. Provide opportunities for teambuilding, career development, and wellbeing. Establish success partnerships so everyone has their go-to person for advice, support, or mentorship.

Recreating a sense of continuity will help you recover trust and belonging.

4. Manage workload by deprioritizing

After a layoff, people feel that their jobs have become even more difficult.

Often organizations plan a reorg based on expected efficiencies that never materialize. Eliminating people – or roles – doesn’t mean eliminating inefficient systems like unnecessary meetings or limiting rules. In fact, remaining employees end up taking additional responsibilities onto their already full plates.  

In the aftermath of massive layoffs, companies should prioritize tasks and projects. This will help them avoid burnout and increase productivity.

The danger of not prioritizing is that everything feels important, long-term vision is replaced by short-term goals, and the wrong tasks end up sucking people’s energy. When everything’s urgent, productivity suffers. Even worse, teams end up solving the wrong problems.

Learn to work smarter, not harder. Focus on efficiency and quality over quantity. Cut out tasks that don’t move the needle and focus on high-impact tasks. Reduce the need for control; forget the idea that everything needs to be perfect.

Practice deprioritization: if a new task becomes a priority, something else must become less important. Effective prioritization is a zero-sum game. You can’t prioritize a task without deprioritizing others.

Just as people had to go, some tasks must be eliminated.

Organizations need to set realistic expectations and goals. If a company reduces staff, it will face the consequences. In addition, some areas, such as customer service and innovation, really can't be optimized. Short-term savings in those areas can come at a high price in the long run.

5. Focus on the future

Survivor’s guilt doesn’t just affect employees but also managers.

While layoffs have a profound impact on employees, the effect on managers is often overlooked. Managers also feel guilty about being spared while others were let go. The guilt can be compounded by the fact that they have worked with some of their colleagues for years. Seeing team members lose their jobs can be emotionally taxing.

Many managers struggle to come to terms with their role in the process. Some feel guilty, others feel they made the wrong decision or could have done more to prevent layoffs.

Guilt can take a deep toll on managers, making them overly cautious in approaching their team members. They may walk on eggshells around their team members to avoid potential conflict or negativity. This can lead to a lack of leadership and increase uncertainty among the team.

On the other hand, some managers may become more harsh and demanding when they've made a tough decision, pushing their team members to work harder even if they're already stretched too thin.

Leaders need to deal with the guilt associated with layoffs. If they feel too much guilt or ignore it completely, they will not be effective long-term.

Start by acknowledging your feelings. What’s driving the guilt? It’s natural to feel conflicted after making a tough decision. Seek support from colleagues or coaches.

Keep the mission present and alive. Research shows that – after a layoff – visible, approachable, open leaders cut the likelihood of a drop in productivity and quality by 70% and 65%, respectively.

It’s important to reconnect with the company's purpose and long-term goals. Often leaders feel guilty for talking about the future after a layoff. But once your team has processed the sad news, it's time to move forward. Use this opportunity to reset your team by developing new strategies, reorganizing tasks, and optimizing resources.

To move past the past, your team can develop new skills or explore new opportunities for growth and development. You might consider offering training programs, career mentoring, or coaching to help reenergize your team.

Practice self-care. Taking care of yourself will help you take care of your team. To rally people after a layoff, try taking meaningful breaks, getting enough rest, and engaging in activities that bring you joy and fulfillment. Breaks allow the brain to reset, reducing a cumulative buildup of stress.

Rebuilding Trust After a Layoff

Layoffs can be challenging for everyone involved. It’s important to take care of your team. Be transparent about the layoff process and communicate clearly with them during this difficult time.

Survivor’s guilt affects both employees and managers. Address feelings and normalize the emotional toll. Leaders need to rebuild trust in the organization, manage workloads effectively, and focus on building a better future. They should promote wellbeing by modeling it themselves.

Article by Gustavo Razzetti, CEO of Fearless Culture

Gustavo facilitates courageous conversations that drive culture transformation. He is a sought-after speaker, culture consultant, and best-selling author of the book Remote, Not Distant.

Razzetti is also the creator of the Culture Design Canvas – a visual and practical method for intentionally designing workplace culture. His insights were featured in

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