Navigating Layoffs with Transparency and Trust: A Guide for HR

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When businesses enter a new year faced with industry-wide news of tech sector job cuts and a tightening of belts in the major tech companies such as Meta and Shopee, it is no wonder workers are losing trust in their workplace.

With recession fears, more potential job layoffs, and the challenging economic headwinds, business leaders are facing their company culture being at risk when employee trust is waylaid. Employees who have escaped the job cuts continue to struggle with conflicting emotions of wondering “who’s next”?

The first consideration for business leaders is to think through the way it conducts layoffs. Ms Evelyn Kwek, managing director of Great Place To Work® ASEAN and ANZ, shares: “Employees today generally do not believe that work is the be-all and end-all in their life. With the widespread use of social media, many openly share their experiences and amplify their grouses online even if they do not share their views and feedback openly to their bosses or to HR. In an unfortunate event that we have to conduct a layoff, let’s at least deliver the bad news with empathy and care.”

In fact, research has shown that one in two candidates would not work for a company with a bad reputation—even with a pay increase, over three in four would consider a company’s culture before applying for a job, and more than half say that company culture is more important than salary when it comes to job satisfaction.1

“The best workplaces go through layoffs; it’s part of business,” says Marcus Erb, vice president of data science and innovation at Great Place To Work®. “Nobody likes to have it happen, but it has to happen sometimes.

How great workplaces handle layoffs

How companies conduct layoffs speaks volumes about how great employers distinguish themselves from merely average ones. A great workplace finds ways to care for employees even as they transition out of the organization.

And companies that are serious about diversity, equity, inclusion and belonging take identity into consideration when pondering staff cuts. The overall approach can be separated into three phases: before, during and after.

1. Before a layoff

Leaders must double down on communication and clarity, says Tony Bond, chief diversity and innovation officer with Great Place To Work. Workers must be left with no doubt that layoffs were a last resort.

“If it doesn’t feel that way, if you haven’t cut costs in other areas (travel, expensive meetings) and you lay off people, then the optics on that aren’t great,” Bond says. When Hilton, a recurring member on the Fortune 100 Best Companies to Work For™ list, had to lay off employees in 2020 due to the COVID-19 pandemic, its leaders didn’t mince words.

“Never in Hilton’s 101-year history has our industry faced a global crisis that brings travel to a virtual standstill,” President and CEO Chris Nasetta told employees. And employees need to keep hearing from leaders throughout the process.

“It’s clarity around communications, it’s the quality of the communications, and it’s also the frequency of the communications,” Bond says.

This is also the time to ask employees for input. Sourcing ideas from across the organization on cutting costs can help employees feel like they have some control over the situation. However, only in companies that have embraced a For All™ culture, where everyone is empowered to innovate, will such efforts be possible.

An emotionally intelligent appeal to workers stands in contrast to companies that have tried to bully workers into resigning of their own free will. Turning up the pressure or asking workers to self-select as someone who doesn’t fit in isn’t the same as asking your team to help find cost-cutting measures to save jobs.

2. During a layoff

Great workplaces go the extra mile to personalize messaging, extend benefits to affected employees and even help them find new opportunities. Showing care also means thinking about how a layoff might disproportionately hit underrepresented groups.

“You really have to look at the landscape of who is being impacted,” Bond says. That means doing careful analysis and resisting the urge to limit the discussion around downsizing to a handful of leaders.

“Typically what happens in a downturn is that leaders get together and huddle separate from everyone else, try to figure things out and then come to people and articulate what’s going to happen,” Bond says. The C-suite might want to restrict information around a decision to cut jobs, but Bond argues that the best companies do the opposite.

“They broaden their focus,” he says. “They talk to more people. They’ve engaged their people around decisions to be made. That process alone helps them really see it through the lens of belonging or diversity, equity and inclusion.”

When organizations get this wrong, the results can make headlines. Companies that show care work to extend benefits to affected workers or even keep communication channels open so that team members can be rehired if the market improves.

3. After a layoff

The best workplaces make sure to engage remaining workers who are perhaps grieving their departed colleagues as well as taking on more work due to staff reductions. Failing to meet the moment with empathy will destroy trust. “Even if you lay people off, you’re still going to have people working for you—and they’re paying attention to how you handled the layoff,” Erb says.

Giving employees an opportunity to express themselves isn’t expensive or complicated. It just requires leaders willing to provide space. “Break people out into smaller groups and give them a few questions,” recommends Bond. “Just explore: ‘How are you experiencing things today?’ It’s really as simple as that.”

Another important step is to connect remaining employees back to your company’s purpose. When trust is fractured because a friend is laid off, employees are looking for something that will let them feel good about continuing to work for the organization, Bond says.

“That’s a time for organizations to really highlight the purpose and the mission and make sure people are rallied around the purpose.”

Leaders should be prepared for some strong emotions. “It’s almost like a death in the family, and you need to process it with the people that are close to you,” Bond says.

Do you consider these vital factors during layoffs?

  • Are outgoing employees treated right and with respect in both good and bad times? 
  • Is the exit message being delivered personally with compassion and sensitivity, and are employees treated with respect and dignity? 
  • Have companies prepared the managers who are responsible for notifying employees of the retrenchment on how to deliver the news in a sensitive manner? 
  • Are HR personnel and union representatives (if applicable) onsite to take feedback and address queries from retrenched employees? 
  • Are particular demographics/groups of employees being disproportionately impacted over others? 
  • Does the company engage in early communications and provide a longer notice period to allow them more time to react and seek alternative employment? 
  • Do leaders double down on communication and clarity, so that employees are left with no doubt that layoffs were the last resort? 
  • Has the company provided retrenchment benefits and job support as employees seek new opportunities?  

Help your company soar through the current economic climate

>Stay informed and respond to the rapidly moving needs of your employees with a high-trust workplace culture.

>Understand and close the experience gaps between employee groups with a culture management tool.

>Explore company culture advice to help you create an inclusive workplace

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To be eligible for the World’s Best Workplaces list, a company must apply and be named to a minimum of 5 national Best Workplaces lists within our current 58 countries, have 5,000 employees or more worldwide, and at least 40% of the company’s workforce (or 5,000 employees) must be based outside of the home country. Extra points are given based on the number of countries where a company surveys employees with the Great Place to Work Trust Index©, and the percentage of a company’s workforce represented by all Great Place to Work surveys globally. Candidates for the 2017 Worlds Best Workplaces list will have appeared on national workplaces lists published in September 2016 through August 2017.