How to Heal Your Culture After Downsizing and Get Back to Winning

After years of growth, it appears we are heading into a period of economic weakness. We see technology company layoffs increasing (according to Crunchbase, 87,457 people across 508 tech companies have been impacted so far this year), an inverted yield curve (2-year bonds are paying a higher interest rate than 10-year bonds, an event that has foreshadowed 10 of the last 13 recessions), and a weakening economy with rising inflation.

This economic weakness may not affect the company you work for, but if you are a leader at a company that has experienced a layoff, or you anticipate one, then you need the skill to heal your organization following downsizing. Although you do not control the macroeconomic factors driving a layoff, you do control how quickly your organization recovers afterwards. Healing is an intentional process that starts before the layoff occurs.

After the layoff, your workers will see leadership failure at many levels and assign blame, which is a natural part of the human search for understanding. When a layoff occurs, people are angry that the layoff wasn’t avoided; that the senior leaders “let this happen”; and that well liked coworkers were hurt. Sometimes, there is even guilt because they survived while a friend did not. These are examples of the negative emotions the organization needs to move beyond so it can adjust course and recover.

The ingredients of a healing strategy

Be human - The healing process starts with how the layoff itself is handled. Bad leaders focus on the people directly affected – let’s say 100 workers. What they fail to consider is that the entire organization is watching – maybe 1,000 people. These are the survivors, the future of the company. For this reason, the layoff must be done with compassion. The communication from the top must be well thought out and empathetic. It must recognize that people have been harmed, while acknowledging their contributions, and sharing the sadness you feel as a human being because this layoff wasn’t avoided. The communication should be designed to minimize the emotional damage to the 1,000 people. Most importantly, the laid off workers should not be treated like parts that are being discarded, otherwise the survivors could worry that the same may be in store for them.

Be fast – Because the organization needs to move on, be fast and get the layoff over as quickly as possible. Don’t drag it out.

Be fair - How were people selected? Let the organization know that people were thoughtfully chosen, and the process was as fair as possible

Be vulnerable - The healing continues if the leaders are vulnerable enough to take responsibility for what happened. In an industry downturn, some companies prosper, so the layoff does indicate something went wrong. Take SAS corporation as an example. They are renowned for the corporate culture and a perennial best place to work. During the 2008 financial crisis and its aftermath, Jim Goodnight, the founder and CEO, chose not to lay off anyone, and grab market share instead. It worked and they had one of the best years in their history as competitors dealt with the aftermath of their downsizings.  

Be trustworthy – Discover what went wrong. Be open and transparent about the root causes and what is being done to address them. Don’t try to cover up the issues. People will see right through the deception, and credibility will be lost at a time when it is needed most.

Be apologetic – The senior executives need to apologize because apology paves the path to forgiveness. A great apology requires skill and is a powerful force for healing. Forgiveness enables the workforce to move beyond the layoff, and pulls them out of the past and into the future. The apology matters because downsizings have multiple causes which include real misfires and mistakes – it’s not just external forces. Hence, the layoff is an opportunity to critically assess what happened and learn from it so that your company emerges stronger and does not repeat the same mistakes.

Be future-oriented – Workers need renewed faith in the present, but after downsizing it is strategic trust that matters even more. The executives create strategic trust by showing the workers why their future will be safe. They must communicate powerfully and confidently and paint a picture of what the future will look and feel like. If the workforce does not see a thriving future, it will be difficult for them to fully engage in their work and stay on board. They will rightfully remain preoccupied with securing their future safety.

Be enthusiastic – You must intentionally choreograph the communication to raise organizational energy and reinvigorate the workforce. Following the layoff, executives must elevate the mood and build optimism by enthusiastically sharing positive news. Mood is contagious. Enthusiasm and optimism are strong healing forces. Even small wins and accomplishments are steps in the right direction and a source of positive energy.

Renewing, rebuilding and reenergizing your department or company requires meaningful teamwork, collaboration, and a passionate belief in the future. Damaged relationships need to be healed and undercurrents of distrust and unfairness need to be replaced with faith in both the leadership and your organization’s future. You can thoughtfully lead your organization through this healing process by choreographing the emotional healing, so that your people go ‘All In’.