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How Tech Leaders Should Approach Layoffs — and How to Build Trust With Remaining Employees How tech managers deal with team and workplace trauma amid layoffs will define how companies bounce back.

By Dr. Laura Hambley Lovett

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

The layoff wave that rocked the tech industry has begun to recede, but with tech capital markets still locked down, layoffs, shutdowns and other tough changes are still in the offing for many companies.

Senior and middle managers generally have no control over the economic forces that cause painful employee decisions — but what they can control is how those decisions are handled and communicated. And how they're handled can make all the difference between lasting damage to their organizations versus paving a clear pathway back to healing and regrowth.

The pure number of layoffs peaked in January, with companies ranging from Amazon to Meta making large-scale cuts. Smaller, money-losing tech companies that can't raise additional capital are still hitting the wall in high numbers, so the pain isn't over yet.

Related: 8 Effective Tips for Conducting Layoffs

How to approach layoffs

But managers can't let their own stress and fear affect the way they communicate with their teams. Bad news isn't easy for anyone. Managers' own stress and anxiety often leads them to oversee layoffs with a business-like approach, treating employees as numbers on a spreadsheet. But in doing so, those executives and managers — and their organizations — come across as harsh and heartless.

This de-personalized, lacking-in-empathy approach tends to have a negative ripple effect on employees who are spared, which in turn negatively affects the future trajectory of the company. When Google coldly laid off 12,000 people via email in January, you can bet the remaining employees lost a big chunk of their sense of loyalty and job dedication.

The aphorism that "People don't remember what you said or did — they remember how you made them feel," applies here in spades. Google's layoffs failed to honor everyone's contribution to the company, and trust was broken. And when employees no longer trust their managers, it can create an underlying panic for those still at the company, fearing they may be next.

When there's a glaring lack of empathy, remaining employees feel disposable, and they are more likely to look for other jobs.

The two critical steps for managers who must implement tough cutbacks are twofold:

1. Navigate the delicate balance of laying off people while ensuring they leave the company feeling appreciated and fairly treated.

2. Invest time and attention in those who remain so they are more likely to stay committed. That might seem like a tall order, but it can be done.

Related: The 7 Worst Mistakes Companies Make When Laying Off Employees

How to build trust with remaining employees

If things aren't going well within a company, its industry or the broader economy, managers should proactively talk to their people to get a sense of how they're doing. Managers should also actively address rumblings or rumors that are concerning and see how team members are processing them. It's okay for managers to admit to their teams that they, too, are feeling concerned.

Even if they're not sure what is coming down the pike, they can help build trust by saying things like, "I can promise you this: I don't have all the answers, but I'll share them as soon as I do, and I'll keep you in the loop."

Trust is also formed with the understanding that uncertainty and mass layoffs take a toll on employees' well-being and mental health. Many managers don't seem to realize this. Today, more than ever, it's crucial to remember that the world is going through post-pandemic periods of uncertainty that breed fear and anxiety.

Managers need to know that some of their workers could be struggling with depression. It's important for managers to be aware of changes in performance and behavior. Psychological and financial pressure stems from layoffs, which can increase the risk of suicide.

Even if managers can't reveal details, they ought to let employees understand why a layoff was necessary. They can take responsibility and outline what is being done to prevent them in the future.

Shared adversity can create strong bonds, too. When setbacks are handled correctly, interpersonal trust among team members can actually grow, laying the groundwork for a company to make it through the hard times, emerging better and stronger.

Dr. Laura Hambley Lovett

Entrepreneur Leadership Network® Contributor

Organizational psychologist, PhD

Dr. Laura Hambley Lovett is an organizational psychologist, keynote speaker and thought leader on the evolution of work who is based in Calgary, Alberta, Canada.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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