Leading Through Layoffs: How Great Managers Handle Tough Transitions

Few leadership moments test your integrity like a layoff. There’s no easy way to tell someone their role is being eliminated. Even when it’s necessary — a restructuring, a funding slowdown, a market shift — it leaves a mark on everyone involved.

And while companies often focus on legal compliance, messaging, and PR risk, what really defines a leader in these moments is how they show up. Layoffs aren’t just about who leaves. They’re about who stays — and most importantly how much those people still trust you afterward.

The Cost of Getting It Wrong

Most leaders don’t set out to mishandle layoffs. They simply underestimate the ripple effect of how it’s done.

I coached a founder who handled layoffs in what he thought was a “practical, efficient” way — short 10-minute calls, no warning, pre-written HR emails. The logic seemed sound: fast and consistent. But the impact was devastating.

He didn’t just lose the departing employees. He lost morale, trust, and credibility with the ones who stayed. People became anxious, nervous, resentful, demotivated. Within weeks, productivity dipped, clients started raising questions, and several remaining team members quietly updated their LinkedIn profiles.

Harvard Business Review Research backs this up: one study found that after layoffs, surviving employees experience substantial declines in job satisfaction and performance. 

Another analysis shows that in the six months following layoffs, employee satisfaction ratings for key talent can drop by 0.16 points on average. (Glassdoor) 

How you handle the process determines whether your team recovers or unravels.

The Current Industry Context

This moment is especially tense. Several large organizations including Meta, McKinsey, Accenture, Alphabet, Amazon are announcing further layoffs or restructuring, and the ripple effect is being felt by leaders at every level.

In the tech sector alone, as of October 2025 there have been over 184,000 job cuts globally, with a significant share attributed to AI-automation shifts. (IEEE ComSoc Technology)

My coachees are nervous. They’re not only worried about their own job security. They’re also unsure how to communicate this uncertainty to their teams. 

How do you stay true to the reality of what’s happening without creating panic? 

How do you protect morale when everyone’s bracing for the next announcement?

Many of them are walking a tightrope: trying to keep their people motivated while knowing that budgets are frozen, workloads are increasing, and resources are shrinking. The hardest part isn’t just managing performance but also managing emotion. They don’t want to sugarcoat the truth, but they also don’t want to watch their teams slide into exhaustion, resentment, or quiet burnout.

That tension - between honesty and hope - is what defines real leadership in moments like these, and no matter how much you practice it, it is never easy. 

What Great Leaders Do Well When Dealing with Layoffs

1. They Lead With Clarity, Not Spin

People can sense when reality is being sugar-coated. The worst thing you can do is pretend everything is fine until the very last minute.

Be clear about the “why.” Explain the context, show what was done to avoid this outcome, and acknowledge the impact. You don’t need to share every detail but you must be honest.

One leader I coached, managing a 15% downsizing in her division, gathered her team, shared the context, and answered questions directly. The team later told her the transparency made a real difference, even though the news was hard.

Clarity builds respect. Silence breeds fear.

2. They Don’t Outsource the Hard Parts of the Layoff

If you’re the leader, you deliver the message. Yes, HR supports the process - but they don’t own it.

I’ve coached leaders who hid behind HR templates. It's tempting especially because the managers are busy and they can invest that time into 50 other things that could move the needle. But this approach always backfires. A 10-minute call from someone they’ve worked with might be uncomfortable but a generic e-mail from HR is worse.

Your people joined because of you. They deserve to hear it from you.

3. They Treat Departing Employees With Dignity

Small gestures matter:

• Let them say goodbye properly.

• Offer meaningful references.

• Extend benefits or access where you can.

I once worked with a Senior Director at Google who would record a short 2 minute personal video message for each departing employee. It wasn’t performative. It really seemed sincere. Months later, several of those individuals reached out to say they would gladly work with her again. 

People don’t always remember the exact words you said but they remember how you made them feel.

4. They Communicate Quickly With the Remaining Team

The hours after a layoff announcement are when culture is most fragile. Your remaining team is watching. They’re asking: Am I next? What’s my workload now? Do I trust leadership?

Don’t wait to craft the “perfect” message. Gather the team within 24 hours, acknowledge what happened, name the uncertainty, and re-align around purpose and next steps.

Great managers don’t over-promise but they do over-communicate.

5. They Rebuild Momentum Immediately after Layoffs

After a layoff, teams tend to freeze. Productivity drops. Decision-making slows. Fear takes over.

Your job as a leader is to shift the energy: create forward motion again. That starts with two actions:

1. Reconnect one-on-one with each remaining team member.

2. Clarify the new priorities and define what success looks like in the next 30 days.

People regain confidence when they see a path ahead and when they see you leading it with conviction.

Leading With Humanity Isn’t a Soft Skill — It’s Strategy

In every layoff I’ve supported as a coach, one truth holds: 

People can handle bad news better than they can handle being ignored, surprised, or disrespected.

How you lead in these moments defines your leadership far more than your biggest wins.

Because when the dust settles, people will remember who stood tall, who told the truth, and who treated them like human beings.

Building Resilient Leaders Who Can Handle Hard Moments

Handling layoffs well isn’t about scripts or checklists — it’s about emotional intelligence, communication, and courage. That’s the kind of leadership muscle we build in Momentum, my Leadership Mastery Program for corporate leaders and founders. 

If you want to learn how to navigate tough transitions — hiring, retaining, or parting ways with people — while keeping your team motivated and focused, Momentum is built for that.

And if your organization wants to equip its leaders to handle these conversations with skill and humanity, Momentum can also be purchased as a corporate training program.

Learn more or register for instant access here: www.leadrisecoaching.com/momentum