Navigating Layoffs in 2023: Understanding the Emotional State of Employees

In the ever-changing business world, layoffs loom large, causing upheaval and uncertainty for those who lose their jobs and those who remain. 2023 has proven to be no exception, as widespread layoffs continue to reverberate across industries. 

The emotional shock of layoffs extends far beyond the individuals directly affected. They impact the well-being and mental health of remaining employees who witness the departure of their colleagues, often without warning. 

Having personally experienced the upheaval of workforce reductions from multiple perspectives, I can attest that surviving a layoff can hit like a ton of bricks. One moment, you’re immersed in a familiar daily routine alongside colleagues with whom you’ve established professional and personal relationships. The next moment, you’re processing the harsh reality of severed connections and the sudden absence of a familiar work environment.

Fortunately, our HR manager led those hard conversations with empathy, thoughtfulness, compassion, and transparency. He took the time to explain the circumstances that led to the decision. He addressed the anxiety and insecurity we were experiencing around our future at the company. Most importantly, the HR manager acknowledged the emotional impacts of losing close colleagues and friends suddenly. 

The way this HR leader engaged the current workforce offers a valuable blueprint for other employers to re-instill confidence and solidify the trust of remaining employees after a layoff.

Examining layoff trends in 2023

The widespread layoffs that swept across the country in the second half of 2022 show no sign of slowing in 2023. Companies across industries and sectors continue to restructure and reduce their workforce. 

While the tech sector is responsible for a disproportionate number of job cuts, other sectors—including media, finance, retail, automotive, and many more—have significantly reduced their employee headcount. 

According to Forbes’ layoff tracker, approximately 194,000 U.S. workers lost their jobs during the first half of 2023 as employers cut costs amid increasing financial uncertainty, declining revenue, and the genuine prospect of a recession in the near future. Nearly 143,000 U.S. workers have been laid off in the tech sector during the first half of this year alone, with the market leaders Alphabet (12k), Microsoft (10k), Meta (10k), Amazon (8k), Salesforce (8k), and Dell (6,650) setting the pace.

What’s driving widespread layoffs?

Another valuable insight provided by the LHH survey are the reasons HR leaders gave for layoffs, either planned or implemented in 2023: 

• 41% cited over-hiring in previous years
• 40% cited cost-cutting imperatives
• 39% cited a restructuring or reorganization
• 38% cited poor business performance
• 36% cited a merger and acquisition, causing duplication

Other economic risk factors contributing to the large-scale layoffs include the following:

1. Fear of a recession, or further economic downturn, in the near future, leading to more widespread layoffs. 
2. Interest rate hikes from the Federal Reserve continue to climb (500 basis points worth since March 2022) to deter higher inflation. 
3. A major course correction across the tech sector, dialing back the spending sprees at the outset of the pandemic that created redundancies throughout the workforce. CNBC stated, “Tech already has cut 5% more (workers) than for all of 2022, according to the report, and is on pace to eclipse 2001, the worst year ever amid the dot-com bust.”

Everyone is concerned about layoffs

Lee Hecht Harrison (LHH) recently published their Risks and Opportunities in Workforce Dynamics: 2023 Career Transition Trends Report. LHH surveyed 2,524 HR leaders from organizations with over 500 employees—spanning five countries—to uncover their expectations, hopes, and fears about layoffs and workplace expectations for 2023 and beyond.

77% of the HR leaders surveyed said they were undertaking or considering layoffs. Half of respondents (47%) reported that their organization is planning—or has already conducted layoffs in 2023. 30% said their organization has not yet decided but might lay people off this year.

How are employees coping with the current layoff trends?

The specter of layoffs is top of mind among U.S. workers, who cite job security as a leading concern in 2023. 

36% of the over 7,000 workers surveyed by LHH are worried about being laid off by their current employer. 45% of respondents expressed fears that layoffs in their industry might affect their future career prospects.

A recent Harris Poll/Justworks survey reiterated the concern among workers, revealing that 42% are worried about losing their jobs due to a potential recession. 

Layoff anxiety is becoming increasingly commonplace among employees feeling the impact of sweeping job losses on their emotional well-being. A recent study by the research firm Perceptyx found that “the workplace experience is increasingly characterized by layoff anxiety.” Their workplace research revealed that worry about job loss was present in more than 50% of the employees—in nearly every subgroup they studied.

Understanding the emotional and mental health impact of layoffs

The emotional processing among remaining employees during the transition period after a layoff is critical.

Employers that lack a plan or strategy to support remaining employees coping with the emotional impact of a layoff can see engagement, morale, and performance levels fall off.

Workplace survivor syndrome is the range of emotional impacts on remaining employees. If not addressed properly, the common symptoms of grief or sadness, anger, resentment, and distrust can manifest in elevated stress levels, anxiety, and decreased motivation, productivity, and performance. 

Mitigating the emotional impact of a layoff, in addition to layoff anxiety, is the smartest investment you can make in your people. Job-seeking behaviors align with workplace anxiety. The more worried your employees are about your honesty or the company’s future, the more time they will dedicate to seeking opportunities elsewhere.

How HR leaders can navigate layoffs and support employees

Whether or not layoffs eventually come to fruition in your organization, HR leaders need to understand the best ways to support the mental health of employees that remain. 

It’s natural for remaining employees to experience uncertainty, anxiety, or distrust of their employer after layoffs are conducted. Here are some best practices HR leaders can put into practice:

• Prioritize a workplace environment that features open and honest communication. Ongoing conversations fueled by honesty and transparency can be the keys to recapturing trust and buy-in from remaining employees. 
• Train your People leaders on effective listening strategies.
• Promote an open-door policy and encourage your people leaders to spend more time outside of their offices, engaging with employees in common areas.  
• Request that all managers increase the frequency of their one-on-one check-ins with their team. Often, employees are reluctant to initiate difficult conversations around others. This will help HR leaders accurately gauge how remaining employees are coping with the emotions of layoffs and reiterate how much they’re valued. 
• Emphasize team-building activities. Enable them to gather in a “safe space” to discuss the new workplace environment, increased workloads/decreased capacity, or any other concerns resulting from the layoff. 
• Offer remaining employees a mental health solution that enables them to process and express their feelings and concerns with a trained therapist.

Preparing for the future

The continuing prevalence of widespread layoffs, and the emotional impacts on remaining employees, mandates that employers become more proactive and prepare a plan—for when that day comes.

If remaining employees are not properly supported, listened to, and given the time to process and share their feelings with HR professionals or trained mental health practitioners after a layoff, they can be particularly vulnerable to the adverse impacts of a layoff on well-being.

Employers’ risks in not addressing the emotional impacts of a layoff are too high, as inaction can negatively affect employee morale, engagement, and performance.

Reinforcing meaningful relationships with your employees while regaining buy-in and trust will be more important than ever for employers in the second half of 2023 and beyond.

Learn more about how to conduct layoffs with empathy and respect while supporting the mental health of remaining employees.