The Psychological Toll of a Layoff—and the Light at the End of the Tunnel

Stress about a Potential Layoff

We can even be plagued with stress just worrying about a potential layoff. In her Harvard Business Review article, “How to Deal with Layoff Anxiety,” Melody Wilding wrote, “As an executive coach, I have an inside view into the trepidation rippling through the workforce and how it’s affecting performance and mental health. Take my client Janice, an accomplished VP of client experience who told me, ‘Every day feels like a waiting game. I live in fear of the morning when I check my email and discover I’ve been locked out.’ Or Noah, a content manager, who said, ‘My imposter syndrome has gone into overdrive. I’m working later and later to prove my value and show I’m worthy of keeping on board.’ “

Stress Even after Surviving a Layoff

We would be remiss not to mention employees who retain their jobs in the face of a forced exodus. Jack Kelly, a senior contributor for Forbes described their feelings of trepidation in his article, “The Workers Who Escaped Layoffs Are Burdened With More Work And Face Fear And Anxiety.” He wrote, “Each morning, the remainers who escaped termination will worry if today is their last day at the company. Every task a person takes on is a potential landmine. If they make a mistake, lose a major customer, say something wrong in a meeting, miss a video call or fight to remain working remotely, there is an inherent risk of being targeted for the next round of layoffs. The combination of extra work, uncertainty and the sword of Damocles hanging over their head leads to a collective feeling of hopelessness about the future, causing the ones left behind to disengage.”

How to Provide Light at the End of the Tunnel

As a business leader, there are steps you can take to foster a positive environment for your employees. The more empowered employees feel, the more confident and impactful they are working at your company, and the more confident and successful they’ll be finding work at a new company in the unfortunate event of a layoff. How exactly can you accomplish this?

You can empower your employees with skills development.

Nearly every employee wants to develop their skills, and nearly every employee with new skills is more impactful. There are countless types of employee empowerment: having direct conversations with employees about their aspirations, setting up potential career paths, skills training in the classroom or the field, granting them autonomy to make decisions, and rewarding them via bonuses or promotions for measurable, quality work. There’s a correlation between empowerment and happiness. And even if an empowered employee is laid off, they’re at least in a better mental state and position to seamlessly transition into a new role at a new employer.

You can start an official career mobility program.    

Career mobility programs are usually thought of as internal efforts to help retain talent, and while that’s true, they can also act as tool to soften the blow of a layoff. Career mobility can include a variety of components: redeployment, career management, skills development, and more. Program success should be measured by following the career paths of individuals. For example, if you have redundant employees in one department, identify one who may have a skillset that’s transferable to another department, and they move to that department and make a quick impact. Again, while this is a common workforce management strategy that benefits a company and its employees, it can also make employees more prepared and resilient if a layoff were to ever occur.

You can offer outplacement services.

Outplacement involves helping those who were laid off to transition as smoothly as possible to new work. It comes in different shapes and sizes but usually means access to career coaching, resume and LinkedIn profile development, interview training, networking, and skills development. Outplacement is designed to guide former employees through the entire transition process, from A to Z. It’s not about simply finding them another job; It’s about pausing, assessing where they want to go, and doing whatever possible to help them get there. And for your company, it’s about being an empathetic and empowering employer, doing what’s right for the people, managing reputation, and reducing legal risks.

During a layoff—as daunting as it can be—there’s always light at the end of the tunnel. Feelings gradually subside and opportunities inevitably arise. As a business leader, you can clearly influence the amount of light. You can turn a dark time bright for so many people—helping them face the future not with fear or trepidation, but with resilience and optimism.

In part four of this blog series, we’ll cover how to manage company reputation after a layoff.