• Prompt, open, and frequent communication with employees during layoffs helps minimize effects on worker morale for those being terminated and, if applicable, for those remaining.

Companies must keep lines of communication open when layoffs are involved. Nothing feeds speculation and rumors more than a lack of adequate communication. Human resources (HR) should explain to employees the reasons for layoffs, how the layoffs will be implemented, and which jobs or departments will be affected. Allow employees the opportunity to ask questions and voice fears. Companies should also:

• Explain the new strategy. Let the remaining employees know how the layoffs and restructuring will affect the company’s profitability and future plans. Make sure employees know how people’s roles will affect the success of the strategy. Explain how work will be redistributed and how departments will be affected.
• Redefine and set goals. Redefine the company’s priorities according to the new strategy. Set realistic goals that will accomplish the priorities, and explain how progress will be measured.
• Involve employees. Layoffs and downsizing often create fear and tension in the remaining employees, which can be alleviated by involving employees in the change. Employees will have important ideas to share about the work environment. Include employees in problem solving groups and transition committees.
• Rethink and innovate. Re-engineer the business; look at things from a new perspective. Hire consultants if appropriate. If the company continues to do the same things in the same way, it may end up with the same problems that led to the first layoffs, only in a smaller size.

Effects upon employee morale

When a company begins a program of downsizing, it rarely only makes one round of cuts. Waves of cutting, restructuring, and reorganization create a tremendous amount of stress on the remaining employees. Anticipation of further cuts causes decreased productivity and poor morale.

In some cases, the employer will face increased threats of or incidents of workplace violence, or incidents of property theft. Some employees may just be looking for the axe to fall, while others may feel guilty about not being let go when coworkers had been, leaving an anxious and mistrustful group of survivors.

The remaining employees may lose respect for and allegiance to the company, and no longer be willing to trust information that comes from management.

Communicating events to the “survivors”

Prompt, open, and frequent communication with the workforce is necessary to maintain employees’ confidence in the management team, and to allay people’s apprehensions. Lack of adequate communication can create fear, confusion, mistrust, and cynicism in the workers who remain, followed by declines in efficiency and productivity.

The company should explain exactly why any workforce adjustment is needed and, in as much detail as possible, which areas or departments will be involved or how many positions will be eliminated. Also, explain whether this will be a one-time event, a series of events, or dictated by future necessity. Finally, provide plenty of opportunity for employees to ask questions and to meet with representatives of HR to find out about severance packages and services.