Coping with Layoffs

Sometimes layoffs are unavoidable. That makes it all the more important to prevent a downward spiral in motivation and performance. Grief research, among other sources, offers insights into how to manage this crisis effectively.

A tense silence filled the conference room as the CEO took the floor – a strange mixture of anticipation and fear. Everyone knew that this spontaneously convened meeting of the entire staff boded ill. “Dear colleagues,” she began quietly, “I would like to speak with you today about an important decision the company had to make…”

Rising costs, financing problems, and digitalization are forcing many companies to restructure and implement short-term cost-cutting programs. This is not a temporary phenomenon: 22 out of 46 German business associations anticipate a net reduction in jobs across their sectors by 2026 (IW Association Survey, December 2025). Planning and implementing the often associated layoffs is one of the most challenging tasks for any manager. For many, the process and the emotionally charged discussions cause sleepless nights. And for companies, cost reduction often comes at a high price.

In practice, it is repeatedly shown that layoffs lead to great uncertainty and motivational problems among the remaining employees – causing lasting damage to company culture and employer brand. But it doesn't have to be this way.

Four factors ensure that affected and remaining employees can process and accept the necessary cutback not only rationally but also emotionally – and look to the future with optimism and motivation again after a manageable period of time:

1. Professional planning and preparation form the foundation.

Even when urgent, layoffs should not be a hasty, ill-conceived action. The selection of those affected, as well as severance packages or a social plan, should be carefully considered, reviewed by employment lawyers, and coordinated with employee representatives. Alternatives should also be explored: It may be that no redundancies with social selection are necessary at all. Often, the required savings can be achieved much less painfully for everyone involved through a voluntary redundancy program with early retirement bonuses. In this case, it is particularly important to offer employees an attractive deal. In addition to a fair severance package, this could include an attractive outplacement or further training program or budget.

2. Communication is everything

Preparation alone is not enough – communication is particularly crucial during layoffs. Many positive and negative experiences have yielded clear dos and don'ts.

This is important:

• The management clearly and transparently announces the need for savings in personnel costs and explains the next steps in detail.

• The affected employees will be informed as simultaneously as possible, or in quick succession.

• Ideally, the information is provided in personal conversations.

• HR managers and executives conducting the interviews prepare intensively – ideally with interview training from a coach specializing in separation management.

And please don't do it like this:

• Employees should not learn about layoffs from the press.

• There should not be too much time between the announcement and the concrete information of those affected.

• Informing those affected via email is unacceptable.

• No information on Friday afternoon, before holidays or vacations: Employees should have the chance to exchange information and process the initial shock.

  
  

3. Plan not only the layoffs, but also the time afterwards.

Often, everything is meticulously planned up until the point of communication – and afterwards, everyone is expected to return to "business as usual." It's easy to forget that we're dealing with people, not machines. And for people, such an event is a profound, sometimes traumatic experience – not only for those directly affected, but also for those left behind. This awareness is essential for creating space for emotional processing.

Grief research shows that a loss is often followed by a period of shock and paralysis. When entire companies enter this state of shock, it leads to a standstill that can cause economic damage – especially if it is prolonged. The process of grieving involves restoring a sense of normalcy after a critical situation, enabling those affected to function using learned patterns. These insights can certainly be applied to businesses.

Employees remaining after layoffs mourn the loss of cherished colleagues – as well as the loss of their sense of security and trust in management. To restore this trust, it is particularly important that management sends strong signals of appreciation. This includes a dignified farewell to the laid-off employees as well as clear signals of support for those affected.

Shared rituals and ceremonies provide support and ease the process of saying goodbye.

In most cases, affected employees are immediately suspended after the announcement, and to prevent potential damage from spontaneous acts of sabotage, all system access is immediately blocked. For people in whom the company has often placed its trust for years and who have worked with great dedication, this feels as if they have suddenly fallen out of favor and are being driven out with great ingratitude. Those who remain also notice this and wonder if the same fate awaits them. Their loyalty to the company suffers a severe blow at this point.

Why do so few companies take the opportunity to organize their own farewell event for departing employees? A few words of thanks, a small symbolic gift, and a final drink together – it costs money and takes some effort, and there will certainly be tears, but the positive effects on motivation, culture, and loyalty are priceless.

4. Active support during the restart is also important.

For departing employees, a challenging phase of career reorientation begins. It offers great opportunities – but realizing them often requires professional support. From emotional stabilization and reflecting on one's own strengths and goals to concrete job applications or starting a business: experienced coaches or outplacement services provide security during this phase and help take the right next steps.

Active support is also helpful for remaining employees. Whether through managers or accompanying coaches: New team constellations and processes must be established, trust rebuilt, and new cultural elements anchored – with the goal of working together again with motivation and optimism on the future of the company.

This has an effect not only internally, but also externally on the employer brand.

Employees who feel valued and experience responsible management are significantly more likely to recommend their (former) company as an employer and speak positively about it.

Where Restart Career supports

Restart Career's work focuses on all four factors : the design of fair volunteer programs, communication training and preparation of managers for separation talks, newplacement for departing employees, and supporting the remaining teams in rebuilding trust and cooperation.

In this way, a painful cut becomes a professionally designed transition that protects culture and employer brand.