Lead with your values:

When Layoffs are Necessary

In the GSD (Get Stuff Done) for Social Good blog, we share best practices in organizational leadership and change management that help drive success at non-profit organizations. Whether driven by financial constraints, organizational restructuring, or shifts in strategic priorities, the way layoffs are managed can have a profound and lasting impact—not just on the employees being let go but also on the morale of the employees remaining and on the culture and reputation of the organization. A humane and values-driven approach to layoffs is ethically sound and supported by evidence-based practice.  

The Case for a Humane Approach to Layoffs
Research consistently highlights the importance of treating employees with compassion and respect during layoffs. For example, a study in the Journal of Organizational Behavior highlights that organizations prioritizing transparency and dignity during layoffs report higher trust and organizational commitment among departing and remaining employees.  While layoffs maybe necessary sometimes, they should be done with care. Honoring and acknowledging the departing employees’ contributions to the organization in a public setting is essential. Doing so demonstrates respect for the departing employees and fosters a sense of trust among the remaining staff, allowing them to move forward with confidence. 

Thoughtful Planning of Layoffs
Thoughtful layoff planning is crucial to minimize negative impacts on employees and to maintain business continuity. For example, a Leadership IQ study found that after a single layoff, 74% of surviving employees reported a decline in productivity, and 69% noted a decrease in the quality of the company’s products or services. Similarly, according to the Harvard Business Review, layoff survivors experienced a 41% decline in job satisfaction and a 20% decrease in job performance.  To mitigate these effects, it’s advisable to conduct workforce reductions in a single, well-planned phase. Timing also matters. Organizations should delay the layoffs until after the holidays if at all possible. This approach provides clarity and stability, helping to maintain trust and engagement among remaining employees.  

Delivering the News to Impacted Employees
Layoff notifications should ideally be delivered by the employee’s direct manager and a Human Resources representative. Research published in the Journal of Business and Psychology shows that employees perceive layoffs as more fair when the news is delivered by someone familiar who provides a clear explanation and expresses empathy. Research from the Greater Good Science Center at UC Berkeley shows empathy during difficult conversations, fosters psychological safety, and helps individuals cope more effectively with change. As such, when delivering the news and afterward, leaders should show genuine care and concern, allowing affected employees to express and validate their emotions. The presence of HR ensures that practical details, such as severance and benefits, are communicated accurately. This evidence-based approach balances emotional sensitivity with logistical clarity, maintaining employee dignity and reinforcing the organization’s values. 

Severance Packages
Research from the Society for Human Resource Management (SHRM) indicates that fair severance packages typically include one to two weeks of pay for each year of service. Additional benefits may include extending health insurance coverage or offering access to employee assistance programs (EAPs).  

Exit Protocols
Abrupt actions, such as immediate account deactivations and rushed exits, can feel unnecessarily harsh to exiting and remaining employees.  More compassionate exit protocols include:

• Offer an optional "transition period," such as 24–48 hours to retrieve personal files or finish conversations with colleagues, transition projects, and foster goodwill without significantly increasing risk. To mitigate risk, organizations could restrict access to sensitive data while allowing limited system use, such as email and phones. 
• Offer “farewell meetings” (virtually or in-person) with team members to recognize the contributions of departing employees, provide closure, and maintain connections, if desired by the departing employee.
• Encouraging leadership to support exiting colleagues by connecting on LinkedIn, sharing job leads, or occasionally checking in to maintain professional relationships and reduce feelings of isolation for those affected.
• Provide managers with guidance to navigate empathetic conversations with compassion while minimizing risk. For example, encourage managers to express support for the departing employee by saying, "I value our time working together and wish you the best in your next steps," while avoiding speculative or legally sensitive comments such as, "I’m sure they’ll call you back once they realize this was a mistake." 
• Provide resources to help employees transition to new roles. Online resume services like TopResume and Resume Genius are cost-effective options, offering professional resume reviews, rewrites, and cover letter assistance for $100–$300. These services are an affordable way to help employees secure future opportunities. Other options include virtual job search workshops, LinkedIn premium memberships, or online career counseling, demonstrating a genuine commitment to employees' futures.  

Communication with Remaining Employees
Transparency is the cornerstone of trust.  Addressing the concerns of remaining employees regarding job security after layoffs is critical for maintaining morale and confidence and retaining desired employees. According to a 2023 survey by BambooHR, 60% of employees want to know what actions are being taken to prevent additional layoffs.  This underscores the importance of providing layoffs in a single, well-planned wave, as discussed earlier. 
Organizations should clearly explain the reasons for layoff and provide as much information as possible to demonstrate fair treatment of the departing employees. Some organizations even explain the formula used to determine severance packages so that remaining employees know that compensation was provided and the formula for calculating severance was equitable. 
Likewise, organizations should review the financial, strategic, and structural challenges driving the decision with remaining employees. Transparent communication about the company’s plans and measures to stabilize operations can significantly reduce anxiety, boost morale, and improve retention.   

Beyond Financial Decisions: A Moral Imperative
Layoffs are more than a matter of financial necessity or organizational strategy—they are a test of values. Behind every layoff is a person with aspirations, responsibilities, and relationships. All organizations should adopt a values-driven approach to layoffs as the evidence supports that this is a good business decision.  For nonprofits, adopting a values-driven approach to layoffs is not only a good business decision; it is essential to advancing its mission effectively. 

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