How to Rebuild Trust After a Layoff

Apr 26

BY RIMMA BOSHERNITSAN, FOUNDER AND CEO, DIALOGUE

A reduction in force is traumatic for those who leave and those who stay. It's crucial to address this early and often.

Once considered "the most reputable employer" in the world, Google has seen that reputation tarnish in recent weeks, the result of a badly-executed mass layoff delivered via a one-size-fits-all email. Across some of the biggest companies in the U.S., from Google to Salesforce to Meta, executive missteps during layoffs have shown a lack of consistency, compassion, communication, and even competency - all elements of building and sustaining trust. And with each new layoff, the disconnect between leaders' words and actions becomes clearer, creating greater opportunities for internal tension and discord.

We have seen this happen in real-time at Twitter, as leadership has rallied employees around product evolutions, only to lay off the very team members who were best equipped to execute them. The end result is that the cascading effects of broken trust have the potential to overwhelm the entire organization.

Trust is a form of currency leaders can't risk losing. It helps facilitate loyalty and fosters a growth mindset that can enrich the entire organization, and toughen it for difficult times. If we lose our employees' trust, we lose the keys to the kingdom of operational success and diminish our ability to fulfill our missions. That's why it's crucial leaders move with purpose and urgency to rebuild trust within their organizations.

Why Rebuilding Trust Must Be A Priority

Layoffs are often framed as a cost-saving decision. But when trust is depleted as a result, it has the potential to do the opposite. The human and operational costs of losing trust can reverberate across organizations for years to come, measured not just in poor morale, but weak company performance.

Trust, in many respects, sustains organizations for the long term. It's the key to operational success and healthy company culture - fueling daily interactions, employees' motivation, and organizational productivity. In fact, employees at companies with high trust report 106% more energy, 76% more engagement, 50% higher productivity, and 74% less stress.

But, layoffs, however well-executed, put this all at risk. In fact, research has found that individuals who were laid off remained 4.5% less likely to trust employers more than 15 years later. Distrust extends to layoff survivors, too. A recent report found that in the wake of layoffs at their organizations, 71% of layoff survivors said their motivation to work had declined and 33% believed things would worsen for their company in the future.

Ultimately, how leaders handle layoffs is one of the most powerful ways they can communicate their values, their strategic vision and direction, and their commitment to employees. Depending on how leadership approaches the immediate aftermath, this can either uproot or enhance company culture and performance in the long term. That's why the imperative post-layoff is always the same: Rebuild.

A Guide to Rebuilding Trust

Researchers Frances Frei and Anne Morris identified three core drivers of trust: authenticity (do employees trust that leaders are being honest, vulnerable, and willing to have hard conversations?), logic (do employees understand the "why," and what drives the company's decision-making?), and empathy (do employees believe that, above all, they're treated as humans first?).

Executive communications will set the tone for the days ahead as leaders approach rebuilding trust. It's essential that both their words and actions distill these values across their organizations.

1. Leaders Must Be Clear About What They're Taking Accountability For

The best leaders know that all people (themselves included) are fallible, but it's no reason to side-step an apology. Research shows that trust is repaired more successfully when leaders apologize for "violations concerning matters of competence" - or as many a tech exec would argue, an honest misreading of the market. When leaders are honest about their own mistakes, it can help engender a greater sense of authenticity. And when what executives can say is limited by legal restrictions, this kind of honesty may be one of the only true ways for employees to understand their leader's decision-making and believe them in the process.

2. Put Employee Confidence First

After a layoff, it's more important than ever for employees to feel like they matter and their questions are heard, not that they're disposable or a low-priority for the leadership team. It's not just imperative for morale, but retention.

For example, when Elon Musk demanded staff embrace an "extremely hardcore" work culture following the first round of Twitter's layoffs, more than half of the remaining employees decided to leave.

Layoffs are a kind of informal invitation for employees to reevaluate whether the company is a long-term fit. How leaders communicate to both departing and remaining employees can make all the difference. In addition to speaking with compassion, reminding employees of their value can help rebuild their confidence in not just themselves, but the entire organization.

First, leaders should acknowledge why employees may feel upset, provide the space for employees to grieve, and commit to active listening. Then, reinforce each employee's unique value by affirming how they are an asset to the organization, and emphasizing how they contribute to the company's big-picture goals.

3. Refocus Employees Around The North Star

For employees to trust their leaders, they need to understand the logic that's driving decision-making. Executives should use the layoff or restructuring to re-communicate the company's North Star, and how it influences both the big and small decisions that are made on a day-to-day basis.

Employees need to understand the belief system and overall strategy to have confidence in it and believe leaders' decisions are always in pursuit of meeting these strategic objectives. In addition to explaining how the North Star impacted the layoffs, leaders should be clear about strategy for approaching the days ahead to help mitigate any further anxiety and confusion that employees may feel.

Trust isn't easy to come by, and building it takes more than isolated grand gestures. To truly rebuild and sustain trust, leaders must execute daily, intentional acts that reify the above values year-round.

Rimma Boshernitsan