Managing layoffs: How can HR avoid 'aftershocks'

Headlines about organisations that are letting go of employees have placed greater scrutiny on how employers manage their layoffs, with risks awaiting those who handle them poorly.

This is according to a new report from Careerminds, which revealed the internal and external "aftershocks" experienced by organisations that carry out layoffs in workplaces.

Internal 'aftershocks'

Internally, 39% of employees say layoffs negatively affected their perception of their employer. Another 21% added that they are unlikely to stay with their employer after layoffs occur.

HR leaders also feel the internal impact of layoffs, with 40% of them saying layoffs increased voluntary turnover.

A study from the Academy of Management cited in the report also noted that layoffs cause higher-performing employees to resign at disproportionately higher rates.

"As high-performing employees often make an outsized contribution to performance, even small increases in voluntary turnover within this group have a significant impact on capabilities, culture, and institutional knowledge," the report read.

"This loss of critical talent reduces productivity, as teams lose expertise, momentum, and leadership."

Reputational 'aftershocks'

The risk stemming from poorly managed layoffs extends to the employer brand, as the report pointed out employees' growing tendency to share their experiences online.

In fact, it found that 69% of employees have already shared or would consider sharing negative experiences of layoffs on platforms such as Reddit, LinkedIn, or Glassdoor.

"These negative experiences tend to get more attention, and persist well beyond the layoff event, shaping how future candidates, remaining employees, investors, and customers view the organisation," the report warned.

"This means that the reputational aftershock can become part of an enduring public narrative, rather than a temporary disruption."

Minimising the layoff 'aftershocks'

Amanda Augustine, career expert for Careerminds and a certified professional career coach, said the findings indicate the importance of how layoffs are handled in organisations.

"When communication is unclear or support is lacking, it can leave professionals feeling undervalued and more likely to share that experience with others," Augustine said in a statement.

"On the other hand, when employers handle layoffs with transparency and provide guidance on next steps, it can make a meaningful difference in how individuals move forward."

Careerminds' findings indicate that many organisations handle their layoffs "moderately positively," but there is room to improve.

According to the report, the most common support provided to employees remaining in the organisation is communication about the company's direction (67%).

Others said they were offered career development and mobility (54%) and mental health or wellbeing support (41%), while another portion noted support in the form of leadership visibility (54%) and team rebuilding activities (38%).

Meanwhile, common support offered to retrenched staff includes severance packages (64%), extended benefits (45%), and outplacement or career transition support (45%).

However, 63% of employees noted that the organisation could have been more transparent with their communications when they laid off staff.

Others said employers could have given impacted employees earlier notice or clearer timelines (58%), and provided them with better career transition support (53%).

According to the report, supporting both sides of a layoff is essential in rebuilding trust in the organisation.

"Organisations that provide lasting support for departing employees and those who remain, through career transition services, clear communication, and career development, are better positioned to thrive after change," the report read.