How to Fix Company Culture After a Layoff

The decision to furlough employees or make permanent personnel cuts is never easy.  No matter what factors led to a layoff, the decision to let employees go hurts everyone—employers, laid-off workers, and the staff that remains. As hard as downsizing is, maintaining and enhancing company culture after layoffs is often the next challenge businesses face. Risking layoff survivor syndrome.

The impact of layoffs on surviving employees is real. They can be traumatized. They are often forced to adapt quickly to the changes and many are left wondering if more layoffs are still to come. As an employer, you may assume that those who were kept would be grateful for still having a job, but keeping an employee on staff is not as strong a showing of appreciation as you may think.

Experts say employees who remain after a layoff can experience “workplace survivor syndrome,” a psychological reaction similar to survivor's guilt after a traumatic event. Workplace survivor syndrome leaves employees feeling anxious about their own job security, overwhelmed by shifting workloads, and grieving their departed colleagues. All of this leads to psychological distress that can leave employees feeling unmotivated, unfocused, and with a shaken sense of trust in the security and stability of the company itself. 

Boosting employee morale after layoffs

It’s not uncommon for those who were spared from job cuts to seek employment elsewhere following a layoff. Research has found that layoffs of just 1% of the workforce preceded a 31% increase in employee turnover, on average. 

So what can employers do to reinforce their commitment to their remaining employees and enhance workplace culture after layoffs?

If reducing overhead was part of the decision to make cuts, it may feel especially painful to think about spending more money on talent, but the period immediately following a layoff is actually the optimal time to invest in your employees. Here are a few things that can help boost morale after layoffs, reduce employee turnover, and get your remaining employees to emotionally reinvest in your company. 

Show strong leadership

The reality is that the trust and security that your employees held for your company have been fractured. Be as clear and open with your communication as possible,  especially around the reasons for the downsizing and what comes next. Share details of what your company is doing for those employees who were let go, such as severance, job placement assistance, or other services, if applicable. 

According to a study that measured layoff survivor stress, managers with high scores for visibility, approachability, and candor reflected employees who were 72% less likely to report a decrease in their productivity. Communicating that the layoffs were a necessary step in service to reinforce the company for a stronger future—and meaning it—will go a long way toward rebuilding the trust of your employees. 

Refocus on your values and purpose 

Remember the purpose and values that ignited the company in the first place. Right after a company layoff, it’s easy to become distracted from your values and core competencies when growth, expansion, and maintaining projects and opportunities compete for your time and focus. Use the restructuring process as an opportunity to recommit to your values—the stuff that makes up your company’s core identity and what you are driven by—will re-engage your team and drive your organization toward success. 

Gallup found that when employees strongly agree that they know what their company stands for and how it is different from competitors, 77% strongly agree that they plan to remain at the company for at least one year. Additionally, 80% of employees felt more engaged when their work was consistent with their company’s core values and mission, according to IBM. 

There will likely be a restructuring of responsibilities, tasks, and workflows following a company layoff. Be mindful of what your employees are being asked to take on, both to help prevent burnout and to better engage your remaining workforce. Take the time to really scrutinize where your team is spending their time and how this aligns with your company’s core values and your employee’s personal values. Reframe success and performance within the context of these values. Maintain focus on your mission and how you deliver value to your customers. Getting this alignment right will result in a more productive and engaged workforce and one that is driven and dedicated to your goals and mission.  

Capitalize on the opportunity to improve company culture 

Use the company layoffs as a catalyst for change. Sometimes the best way to convince your employees that you are serious about creating a healthier culture is to show them. Invest in the employees you want to keep. Not only will this reassure employees that you value their contribution to your organization, but it will also help to reframe what could easily be viewed as a negative, traumatic experience as an exciting career opportunity. Leadership development investments like training and performance coaching will reignite your remaining employees and give them the tools they need to propel your company forward, reinforced and stronger than ever before.

Investing in your employees

There is ample evidence that investing in your employees leads to increased productivity, retention, and reduced cost to employers. But actually demonstrating that commitment to your workforce following a series of layoffs and staff reductions does double duty. It provides the “walk” to go along with the “talk” of how you are committed to fostering your company culture and adding value to employee growth. And it also results in stronger, more capable, resilient, high-performing employees. 

The decision to terminate employees is a tough one to make. But by uncovering ways to return to your values, committing to transparency in communication, and prioritizing people over profits with new investments in your staff, companies can leverage the positive outcomes while minimizing the damage.

Schedule a demo to see how Valor can help ignite your employees’ passion and improve culture after a company layoff.