Layoffs send shockwaves through an organization, disrupting not only business operations but also the hearts and minds of those left behind. The impact on remaining employees can be profound—often manifesting as anxiety, guilt, uncertainty, and even resentment. According to recent studies, after a layoff event, 74% of surviving employees report a decline in productivity, and many say trust in their leadership diminishes significantly. Leaders must act decisively to manage this fallout, address emotional needs, and rebuild cohesion.

The Challenge for Remaining Employees

After a round of layoffs, your team’s sense of normalcy is shattered. Employees grapple with “survivor guilt,” questioning why they stayed while colleagues were let go. There’s often a pervasive fear that further cuts could come at any moment. Workplace friendships may be disrupted, team structures are altered, and everyone is unsure how their individual roles will change.

Beyond these emotional realities, practical issues also arise. Workloads may increase without extra compensation or support, leading to burnout. Essential knowledge and skills may walk out the door with departing colleagues, slowing down remaining projects.

A few examples:

  • A project manager who relied on an assistant now has to pick up unfamiliar tasks, creating stress and inefficiency.
  • Former close-knit teams splinter, as employees adjust to reorganized or merged units, often struggling to form new bonds.
  • Remaining staff avoid taking time off, fearing that absence could make them appear less indispensable.

Leaders must confront these challenges head-on, stabilizing not just business outcomes but the emotional health of their teams.

Strategies to Rebuild and Restore

Rebuilding team morale after layoffs isn’t easy, but thoughtful, multifaceted action can make a real difference. Transparency and compassion are key, but so are tangible initiatives to demonstrate that the company values its remaining people.

Here are actionable steps to guide your team through the transition:

  • Hold Open Forums and Listening Sessions:
  • Go beyond standard team meetings by organizing open forums where employees can honestly express their fears and frustrations. Consider small-group listening sessions or anonymous feedback tools to reach those who might shy away from speaking up in public. Follow up with concrete responses to concerns raised.
  • Provide Mental Health Resources:
  • The stress of layoffs can lead to anxiety, depression, or burnout. Ensure your team knows how to access mental health support, such as Employee Assistance Programs (EAPs), counseling, or online mental wellness platforms. Invite mental health professionals for workshops or one-on-one sessions, and encourage regular mental health check-ins.
  • Set a Clear Vision and Communicate Frequently:
  • Employees crave reassurance about the company’s future. Share the “why” behind the layoffs and outline a transparent recovery strategy. Set short-term goals to create momentum, and frequently update the team on the company’s progress. Make space for questions—don’t shy from tough conversations.
  • Redefine Roles and Provide Career Support:
  • Clearly communicate any changes in responsibilities, and offer training to address knowledge gaps left by departing staff. Career development sessions or coaching can help people envision a future with the company. Share success stories of colleagues who have advanced during challenging times to inspire hope.
  • Recognize and Appreciate Efforts:
  • Increase your efforts to recognize hard work—public shoutouts in meetings, thank-you notes, small tokens of appreciation, or flexible scheduling in recognition of extra effort. Even low-cost acknowledgments can have a significant positive impact on morale.
  • Foster Team Cohesion:
  • Organize team-building events, virtual coffee breaks, or informal gatherings—whatever feels authentic to your culture. Encourage mentoring relationships so employees can support one another, both professionally and emotionally.
  • Offer Flexibility and Support Work-Life Balance:
  • Demonstrate understanding that people may need time to adjust or take care of personal mental health. Where possible, offer flexible hours or remote work options to ease pressure during the transition.

Deeper Insights for Leaders

Leaders face their own set of challenges. They must manage their personal emotions, maintain business continuity, and support their staff—all under increased scrutiny. Transparent leadership is crucial: share your own feelings appropriately, acknowledge the difficulty of the moment, and model resilience without denying reality.

Resist the urge to return to “business as usual” too quickly. People need time to process loss and adjust to change. Check in regularly with team leads and individuals. Use pulse surveys to track morale and spot issues early, before they spread.

It’s equally vital to watch out for signs of disengagement—like absenteeism, withdrawal in meetings, or declining performance—so you can intervene early with support, not discipline.