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Making redundancies without damaging your company culture

How to prepare for layoffs, dismiss someone (nicely) and keep your wider team motivated

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How redundancy affects an employeeHow redundancies affect company culture How to tell an employee you’re letting them go7 ways to maintain employee morale during (and after) layoffs

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We’ve all heard about, if not been part of, the mass layoffs caused by a craggy financial downturn in 2022. Letting an employee go isn’t something any manager looks forward to. It’s not nice to do, and it doesn’t come naturally. 

Being more intentional about preparing for redundancies, communicating them responsibly and looking after your team’s morale while you’re downsizing is a sensible way to protect your employees and your own emotional wellbeing at work. 

But before we look at ways to manage layoffs sensitively, let’s look at the impact redundancies can have on a personal and organisational level.

How redundancy affects an employee


A business can only make an employee redundant if there’s no longer a business need for their role. Firing someone, on the other hand, means that their behaviour or performance has played a role in their dismissal. 

Redundancies by definition aren’t personal – though it can be hard to remember that when you’re sitting with your desk plant on the 6.14 train home. Our job plays a big part in our identity, so when we lose it, our self-esteem can take a knock.

Any time our future gets a bit unpredictable, we’re more susceptible to feelings of stress or anxiety – and when you add in the logistics of financial uncertainty, being made redundant can have a significant impact on our mental health and wellbeing overall.

We’re not telling you this to make you feel worse about making redundancies in your business. But anticipating feelings of shock, sadness or anger from your employees might help you to offer the right kind of support during the redundancy process. It can also help you to feel more prepared to manage difficult and emotionally-raw conversations as a manager. More on those later.

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How redundancies affect company culture 

When Elon Musk bought Twitter, fired half of its employees and then threatened to sack anyone else who wasn’t up for sleeping at their desks and working “long hours at high intensity,” he might have been surprised that no-one seemed as keen to work at Twitter as he was.

The way you handle necessary redundancies affects your brand and your reputation in the wider industry, as well as morale in your remaining team. Knock-on effects can be broad and brutal. 


People quitting

You may have spent hours responsibly working out who to let go (based on fair selection criteria) but the employees you were banking on staying might have different ideas if they’re left uncertain about the future of the business, disgruntled by the way redundancies were handled, or picking up the slack indefinitely as part of a leaner team. Research has shown that downsizing a company by just 1% leads to a 31% increase in voluntary turnover the next year.

Lower employee productivity

A study by Stockholm university and the University of Canterbury found that after redundancies, the rest of a workforce experiences a 41% drop in job satisfaction and a 20% decline in performance – caused by a combination of increased workload, loss of social structures and a muggy air of uncertainty.  

Damaged customer relationships

If your business model relies on close relationships between sales, client or service teams and your customers, then it’s reasonable to expect a dropoff in loyalty and engagement once some of those familiar faces have gone. 

Less innovation and collaboration

A bunker-down mentality can mean that more of your team focus on objective performance metrics to prove their value – rather than investing any energy in problem solving or new ideas. People may be less keen to poke their head above the parapet to voice their true opinions. And when key members of the team have gone, it’ll take a bit of time for people to recalibrate their working relationships and work out new ways to collaborate between departments, teams and individuals. 

Difficulty hiring in the future

After a negative layoff experience, 70% of companies notice a negative impact on talent acquisition, and 81% report a negative impact on brand perception, according to a 2018 study by Randstad. If your remaining workers have always taken pride in working with the best people for a renowned company, then this might be enough to shake their commitment, too. 

Distrust and stress 

A job’s psychological contract is an implicit agreement between your workers and your company. It’s an understanding that if you turn up on time, get your work done and make an effort on behalf of the company, then you’ll be rewarded fairly. Your job is safe, your salary is guaranteed, and maybe there will be opportunities for growth along the way. This belief drives our sense of motivation at work. Which is why an unexpected company downsizing can feel like a personal breach of trust. Your company isn’t a meritocracy, and even the ‘best’ workers are vulnerable to company restructures. This sense of uncertainty leads to a distrust of leadership, and usually a fair amount of stress, which is a significant precursor to poor mental health.

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How to tell an employee you’re letting them go

There’s loads of sensible guidance out there on how to make redundancies responsibly.
Legally, the process will involve:

  • sharing your plans to make redundancies with all staff (including anyone on sick or parental leave)
  • writing to anyone whose role is at risk
  • holding a meaningful consultation with those people before you even make a decision about which jobs are being let go 

In short, the news that your employee is losing their job won’t come completely out of the blue. But that doesn’t make the big conversation any easier. We’ve written some tips to help you handle these meetings with care and compassion – which is as much about clarity as it is empathy.

Before your meeting

Be thoughtful about where and when to meet

Unless you work remotely, a face-to-face meeting is more respectful than a phone call. Make sure to choose a setting that offers enough privacy from the rest of the workspace, ideally on ‘neutral’ ground. It might be best to have this meeting late in the day or just before lunch, when an employee can leave your workplace discreetly if they’re not feeling sociable afterwards. 

Think about roles in the room

One exercise to help you feel more prepared is to jot down what each person needs to get out of this meeting. Your objectives might be to communicate clearly on behalf of the business, and answer any questions your employee has. Your colleague’s objectives might be to understand how they will be affected by this redundancy and – probably – to feel genuinely listened to. If an HR or union representative is present, think about what they’re bringing to the table, from note-taking to legal advice (and don’t forget to introduce them at the top of the meeting).

Get your facts straight

Make sure you’re clear on the timings and logistics of the redundancy before you break the news. Anticipating your employee’s questions ahead of time can help you to communicate more calmly. As well as knowing the facts about someone’s notice period, benefits and remaining holiday allowance inside out, you should be prepared for more emotional questions, too. Things like “Why me?” or “Who made this decision?” can be disconcerting, but usually have an objective answer you can think about ahead of time.

During your meeting

Avoid small talk

It’s tempting to add a bit of chit-chat to the start of an uncomfortable meeting, but that’s usually more for your own benefit than your employee’s. Get straight to the point, if you can.

Keep your language direct

Hearing hard news can be a shock, so using short sentences and avoiding jargon will make your message easier to absorb. Try to be direct and keep things objective – “Your role has been made redundant” is more sensitive than “You’ve been made redundant,” for example. Using past tense can help to confirm in your employee’s mind that the decision has already been made.

Leave space for emotions

If you’re stressed about delivering bad news, it’s natural to try and fill any awkward silences. But listening to your employee is vital. Give them time to react or express their feelings, and acknowledge them out loud. Rather than offering platitudes like “I know how you feel,” you could try “I realise this has come as a shock.” If they’re silent, you may need to repeat or clarify any key points to make sure your message has been understood. If they’re angry or upset, it’s important not to defend or debate the company’s position. Stay calm, let them talk and reassure them that the decision wasn’t taken lightly. 

After your meeting

Make sure that next steps are clear to your employee. Now’s a good time to remind them about any resources like mental health support or careers advice that may be available in your business. Get a follow-up meeting in the diary if you can help them personally, either through written references, support with job applications or introductions to professional contacts in your network. Take the opportunity to show that you believe in their success, even if it’s not at your current company. 

7 ways to maintain employee morale during (and after) layoffs

1) Be honest

Hopefully, your company will have been transparent about the redundancy process from the very beginning. If you’re making less than 20 people redundant, you don’t legally need a full-blown redundancy consultation process, but letting key remaining employees know about layoffs before they happen is an important way to dampen shockwaves and keep everyone in the loop. 

The need for honesty doesn’t stop once layoffs have been finalised, either. An all-company meeting to reassure remaining staff, talk about why redundancies were necessary, and recommit to a plan for the future is a difficult thing to host but a really necessary step to maintain trust in the leadership team.

If your team thinks it was simple luck that saved their particular job, a sense of imposter syndrome can creep in and undermine employee confidence overall. If your remaining employees were chosen carefully, let them know!

To quash any lingering sense of uncertainty in the months that follow, make sure to keep proactively talking about business decisions, your financial situation and the (hopefully low) likelihood of a similar event in the future. Help people find new jobs Take a leaf out of Pleo or Monzo’s book and set up a talent directory to make recent leavers more visible to headhunting companies in a similar industry. Not only will this help your ex-employees to find new employment more quickly, but it’ll reassure your remaining team that support from your company doesn’t drop off immediately after being let go. A separate workspace on Slack for alumni to stay in contact is always a nice touch, too.

2) Help people find new jobs

Take a leaf out of Pleo or Monzo’s book and set up a talent directory to make recent leavers more visible to headhunting companies in a similar industry. Not only will this help your ex-employees to find new employment more quickly, but it’ll reassure your remaining team that support from your company doesn’t drop off immediately after being let go. A separate workspace on Slack for alumni to stay in contact is always a nice touch, too.

3) Ask for feedback

Set up an anonymous way for your surviving team to voice any concerns and make sure you have a robust and regular wellbeing survey in place. This will help to track the mood in camp and spot any early signs of employee burnout. Once you’ve gathered feedback, make sure to address areas for improvement and (you guessed it) tell the rest of your team what you’re working on, and why. This will help to orientate your team’s thoughts towards the future and show your commitment to them moving forwards. 

 

4) Host exit interviews

Exit interviews are valuable when anybody leaves – they can offer closure for an employee who’s moving on, and they give you an opportunity to learn a lot about your company culture and employee experience. These might be even more valuable when someone has been made redundant, because you can bet they’ll be completely honest. Make sure to keep an anonymous record of exit interviews and look for themes that keep cropping up. This should give you a better idea about where to focus your attention to improve morale for a slimmed-down workforce.

5) Keep pointing enthusiastically at your mental health resources

If you have an Employee Assistance Programme that offers medical advice, or a specialist mental health support system like Spill in place, then keep cheerleading those services. If you can, offer your wellbeing benefits to ex-employees too, for a reasonable period. Access to therapy can help people to handle stress and process the complicated emotions that can be stirred up by job losses. In fact, a course of therapy by Spill is shown to reduce anxiety by 74% in just 6 weeks. 

 

6) Make your leadership visible

News about redundancy will likely have come from the top. So showing up in company meetings and being willing to listen to people’s fears for the future is an important part of taking responsibility for big business decisions that have affected the whole team. Clear and empathetic written communications (like this open letter by AirBnb CEO Brian Cheskey) are another good way to stop the rumour mill; reorientate your team around your mission; and show that making redundancies is an emotionally challenging time, even for big boss types.

7) Think about training

Budgets might be looking tight for a while, but showing intent to invest in your downsized team is a reassuring signal that these are the people you see moving your business forward. This might be on-the-job training to fill any knowledge gaps that have been left open, or you might consider upskilling your whole team in something more abstract (but no less useful), like emotional resilience. 

What we’ve learned from making redundancies at Spill

When market conditions changed and Spill made a team redundant in June of last year, CEO Calvin openly shared our financial runway with the wider team to show why difficult decisions needed to be made quickly.

“Telling people that they were being made redundant within a week of the company making that decision meant that we weren’t being inauthentic with anyone in the team, or getting managers to set arbitrary targets for people they knew would be leaving. We were incredibly honest with people. Nobody was left with any question marks.” – Calvin

 

Rather than asking people to work their notice period, Spill let leavers spend that time digesting the news and applying for jobs, instead. Although this helped our remaining team to adjust quickly to the new normal, it also made it harder to say thanks and goodbye (something we later realised might be more important for the morale of the team staying than for anyone leaving). 

Another learning for our team was the importance of thoughtful manager handovers. Giving people enough time to prepare and deliver these before they leave the business is vital for supporting more junior team members and stopping them from feeling disoriented. The need for stable leadership is naturally more important when things feel wobbly.

“When morale is low after making redundancies, it’s easy to make promises in the moment that you can’t follow through on. We kept a promise to backfill any roles in our downsized team, and as time went on it reassured everybody that their position was safe. It proved that these were the people and the roles that we were relying on to move our business forward.” – Calvin

Redundancies aren’t nice. But they are a good pause point. 

 

Being thoughtful about your redundancy process is worth it for everyone involved. As a manager, setting new targets with fewer workers can also be a good opportunity to reflect on your working practices and recommit to a healthy work-life balance in your team overall.

That might mean refocusing on the basics or dropping a few meeting invites, but nobody liked that Friday lunchtime catch up, anyway. If you’re looking for ways to help your new team feel better at work, we’ve got a great big list of employee wellbeing initiatives that might just help. 

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