Bob Schultek
Author of
The Gauntlet

When business turns down, and layoffs are necessary, preserving culture can be challenging for leadership. 

Leaders who sustain the dignity of those who must depart, who communicate clearly and honestly, employ a fair, ethical process, and offer resources to assist are seen as modelling a company’s core principles, thus preserving some trust with the survivors. 

A poorly managed downsizing damages that trust, perhaps irrevocably. It also crushes morale and loyalty, increases resentment, and reduces employee engagement just when leaders must rely on survivors to stem declining performance.  

During and after a layoff, it’s essential for leaders to behave in accordance with core values to re-energize and re-motivate those survivors. These tips can make the difference: 

Communicate the relationship between the downsizing, corporate strategy and the preservation of culture so that employees understand why the workforce reduction was necessary and how it supports the long-term success of the business. Clarify the fairness of the reduction process to generate support for a new strategy, and to foster a culture that promotes collaboration, innovation and improvement. The survivors’ judgement of fairness depends upon both the substance (taking the right actions) and the style (doing things right) regarding how the layoff is handled. When asking for sacrifices from employees, for instance, it is important for senior leaders to model those sacrifices as well. 

Engage in open dialogue with employees, soliciting their input about the shape of the post-layoff environment. Once the psychological contract between the company and its employees has been broken, survivors are concerned that the quantity and quality of their work may change, and are uncertain about their future opportunities and the long-term viability of the business. Admitting that the downsizing decision was a wrenching one shows that leadership is authentic and vulnerable, struggling with a painful situation. Similarly, leaders must encourage survivors to share what they are experiencing. Involving them in these discussions conveys respect and starts to rebuild trust and loyalty. 

Maximize job enrichment, clarifying new opportunities and available career paths. Seeing the opportunities that accompanied the “old way of doing things” dis­appear, survivors may conclude that their chances for improvement and advancement in the post-layoff environment are limited. Leaders must communicate to employees that they are important assets for the company who make all the difference, and that now, as a result of the downsizing, the potential exists for them to co-create skill development and role refinement opportunities. 

Recognize and reward those survivors who demonstrate desirable behaviors that reflect the company’s culture.  To strengthen the company’s culture, promote the behaviors of employees who perform beyond their job requirements in support of their colleagues and for the benefit the organization, relating these actions to core values. People often learn by watching the outcome of others’ behaviors. Public recogni­tion of preferred, values-based behaviors can encourage survivors to undertake the actions necessary to help the company adapt to and recover from the layoffs.

How prepared are you for the next downturn?