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The Art of Downsizing — How to Handle Layoffs in a Humane Way Here's how leaders can handle layoffs in a way that prioritizes both the well-being of employees and the success of the business.

By Will Fan

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

As leaders, we all face difficult decisions, but few are as challenging as laying off employees. In a world where business success is measured by growth and expansion, letting go of team members can be a devastating blow. However, it's a reality that many businesses face, particularly during times of market downturn or economic hardship. In this article, we'll explore how to handle layoffs in a humane way that prioritizes both the well-being of employees and the success of the business.

The Tech Winter of 2022 serves as a reminder of how sudden and widespread layoffs can be in the tech industry. During this period, companies that were once flush with funding suddenly found themselves struggling to stay afloat. Some of the most prominent tech companies, such as Amazon and Meta, shuttered their doors and left thousands of employees without work. While we are currently experiencing a different economic landscape, the impact of the pandemic has highlighted the need for businesses to be prepared for unforeseen challenges that may require difficult decisions.

Related: 8 Effective Tips for Conducting Layoffs

Creating a minimal viable team

When it comes to laying off employees, it's essential to focus on rebuilding the team from the ground up. This means creating a minimal viable team that is capable of carrying the company forward during difficult times. In determining who to retain, it's crucial to prioritize skill sets that are essential to the company's success. While this may mean letting go of talented employees who have contributed significantly to the company's growth, it's essential to remember that the goal is to ensure the company's survival and future success.

In the lead-up to layoffs, it's critical to have honest and transparent conversations with employees. This means providing regular updates on the state of the company and being clear about the possibility of layoffs. While these conversations may be difficult, they help to build trust between the company and employees and prepare everyone for what may come.

Gratitude and respect

When it's time to lay off employees, it's essential to do so in a way that is compassionate and respectful. This means being upfront about the reasons for the layoffs and providing as much support as possible to those who are leaving. Offering severance packages, job search assistance and outplacement services can help ease the transition for those who are losing their jobs. Additionally, it's important to take the time to thank these employees for their contributions to the company and for being a part of the journey. This helps to ensure that they leave with a positive view of the company and are more likely to speak highly of their experience.

It's also essential to plan ahead and ensure that those remaining on the team are equipped, inspired and focused on succeeding. Layoffs can be demoralizing for the team, and it's important to address any concerns or fears they may have. Providing opportunities for professional development, setting clear goals and celebrating wins can help to reinvigorate the team and remind them of the company's mission and values.

Related: How to Do Right By Employees -- and the Company -- During a Workforce Change Like the Recent Tesla Firings

Rebuilding trust

It's crucial to remember that employees who remain with the company after layoffs may have survivor's guilt or be struggling with their own job security. It's important to address these feelings openly and honestly, acknowledging the difficulties of the situation and providing a clear plan for moving forward. Transparency is key in rebuilding trust with the remaining employees, as they need to know that the company is stable and committed to their well-being.

Leaders can also take this opportunity to reevaluate the company's culture and values, ensuring that they align with the company's mission and vision. This can involve addressing any toxic behaviors or patterns that may have contributed to the layoffs or a general sense of unease within the company. Creating a positive work environment where employees feel valued and supported is key to retaining talent and fostering a strong team culture.

Moving forward

Layoffs are never easy, but they are sometimes necessary for the survival and success of a business. By focusing on rebuilding the team from the ground up, having honest and transparent conversations, being compassionate and respectful, planning ahead and providing ongoing support, businesses can handle layoffs in a humane way that prioritizes both employees and the success of the company. While layoffs may be difficult, they can also serve as an opportunity to refocus the company's efforts, strengthen the team and move forward with renewed purpose and determination.

Related: Dignity and the Pink Slip: What Are You Doing to Bring Decency to the Process?

Will Fan

Entrepreneur Leadership Network® Contributor

Head of School at NewCampus

Will Fan is the CEO & Head of School at NewCampus. At the intersection of design, education and community.

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

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