How to Handle Layoffs – Managing Those Left Behind

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Last Updated on November 20, 2023 by Bill Truby

Barbara managed a small company of 30 employees, a company we had been working with and helping to grow by working with the Truby Management System (TMS). Though the company was healthy and the team was growing in their abilities, through no fault of Barbara or her team, the current and projected level of business could not support 30 people. Barbara was forced to conduct a significant layoff.

Though she handled the layoff process as well as could be expected and worked with each employee to deal with unemployment issues and/or find other work; still she and the team members that remained were paralyzed…until Barbara learned how to manage the people left behind.

Layoffs are hard. And they’re supposed to be. If they weren’t it might mean you don’t have heart. Nevertheless, layoffs can become necessary even in a healthy business.

Reasons for Layoffs

There are two main categories of reasons for layoffs. If an employee is not performing adequately, a manager needs to take that person through due process of counseling, training, or discipline. If the employee still can’t perform adequately, he or she needs to be terminated.

Too often we see companies putting up with inadequacies or incompetence, usually in the name of goodwill toward the employee. But this kind of inappropriate tolerance affects the entire team. At the least it lessens their motivation and morale; at the most, it gives silent permission to be inadequate too.

A business is a business and needs to be conducted as one. Though you want to take care of people, you are not running a hospital. Though you want to accept people and help them grow, you are not running a church. A high performing team expects contribution from the team members and never tolerates incompetence. No contribution – no job.

A second reason for layoffs can be if there is a strategic decision to downsize. Outsourcing a current in-house function, eliminating a regional presence or the economy not supporting the current number of employees – all can cause a manager to lay off staff. And this is particularly hard.

Often, when a strategic decision to downsize occurs there is a decision to eliminate good people. When happens the individuals terminated can ask, “Why me?” (…as compared to other employees who, in their estimation, deserve to be fired). Even those left behind can say, “Why them?” And some even say, “Why not me?!”

Manage Those Left Behind

In any case, when layoffs occur, though they be temporary or permanent, because of incompetence or from a strategic decision, the event typically perpetuates questions, confusion, and often fear in those left behind. There are many issues that need to be addressed in the process of layoffs; from HR to financial impact to job restructuring. But one issue that is not often handled well is managing those left behind.

The process of termination itself can be disastrous. We’ve seen some real horror stories. How the layoffs occurred devastated and demoralized the team that remained. One such situation involved the senior principal of a 35 person firm who needed to layoff seven people. One by one the individuals were called into the principal’s office using the overhead intercom. The employee being terminated entered his office that had a glass wall open to the central work area. Everyone could see the reactions. Further, there was no explanation or words given to the remaining team so each of the terminated individuals put their spin on the story as to what happened. Disaster!

Though there can be a lot to discuss about the termination process itself, this article is to focus on those who remain. The first consideration for their well being is to handle the layoff in a quick, kind, and caring way. After especially if the layoff is significant, hold a team meeting to give as much reason and context for the layoff as possible. Be encouraging but not apologetic. This is one of those meetings where leadership skills (as compared to management skills) are supremely helpful, no…necessary.

Now, the first person to consider in “managing those left behind” after a layoff is – YOU! Your perspective will dictate your attitude and behavior. If your perspective leads you to feel remorse, guilt, or protective about those terminated, your attitude and behavior will be affected, and believe us, transparent to others.

Get support, but never from your staff. Seek encouragement, support, or realistic perspective from someone senior to you or outside the company, as in your counselor, pastor, or friend. As a manager, you must learn to “care without carrying.”

Now let’s look at managing the people who remain, which demands a judgment call. The path of what to do is clear; the timing of it is what takes wisdom. In addition to the process of loss which is a more personal process each individual experiences; there are three phases the team as a whole will go through. Following is a description of those phases and what to do.

Phase 1. Adjustment

The team will need to adjust to a variety of realities surrounding a layoff. From personal issues such as losing friends, to workload adjustments. During this phase, there can be a lot of questions, confusion and for many, fear of the future and the potential loss of their jobs. During this phase, it is important to be close to your team. Give them as much information and perspective on the company as possible. Be positive, and never be defensive. Your personal confidence about the future and firm stand on the necessity of the layoff decision is critical.

And be prepared for irrational responses. Unless significant, simply fend them off or ignore them. Individuals who criticize and speak openly about their concerns may need to vent. This should be temporary. Making a mountain out of a molehill at this phase can amplify something that may simply evaporate with time.

Phase 2. Challenge

It is important to allow a period of time for the adjustment phase. But don’t get stuck in the first phase. A well-meaning manager may perpetuate the complaints, concerns, and fears of the team by continuing to talk about the layoffs, defend the decision, or act as a “caretaker” of those who remain.

But how long should you wait to begin phase two? This is the judgment call we talked about. Your personal wisdom or wisdom that comes from fellow leaders can determine when to engage this phase. Too quick and you appear insensitive. Take too long and you risk embedding negative responses seen in phase one.

What needs to happen in phase two is to call a meeting and create a challenge. The team needs to stop looking backward and begin to look forward. The challenge can be anything but it needs to be clear and you need to be overt about it. The challenge can even refer to the need for the company to grow, with the obvious implication…” to avoid more layoffs.” Be specific about what the challenge is and what each person or department needs to do to meet the challenge.

At this phase, you need to be a leader and a manager. Be motivational but be clear on the tasks, tools, and metrics for success.

Phase 3. Development and Growth

When you and your team have normalized after a layoff, it’s time to get back in the saddle and work on growth issues. Developing, training, and growing your team will support the challenge in phase two. Additionally, it will create a stronger workforce to grow the business.

Returning to the development and growth of the business is important now too. Strategic plans, marketing efforts, getting more efficient – all are important activities towards growing your business, and preventing further layoffs.

Build Your Business

These three phases will strengthen the team and build your business. Phase one, adjustment, allows the team to vent, decompress, and find their footing.  The challenge in phase two gets the team looking forward again. And Phase three prevents further layoffs. Taking a team through these three phases is the best way to manage those left behind after a layoff.

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