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Do Layoffs Harm Productivity? How it Begins

In times of economic uncertainty, companies may need to make tough decisions such as layoffs to stay afloat. However, layoffs can have a negative impact on employee morale, productivity, and retention, as well as damage the company’s employment reputation where it really counts – Future and Current Employees. 

The Real

It’s never the Economy.


Here is a classic:


Dear [Acme] Employees, 

I wanted to share with you some difficult news. After careful consideration and evaluation of our business operations, we have made the difficult decision to reduce our workforce. This is not a decision we made lightly, but one that we believe is necessary to ensure the long-term success of our company.

We understand that this news will be difficult for those who are directly affected, and we want to express our heartfelt gratitude for your contributions to our organization. We will do everything in our power to support those who are impacted and to make the transition as smooth as possible.

We remain committed to our core values and to our mission of providing [Company Name’s products/services] to our customers. We will continue to work hard to deliver the high-quality service that our customers have come to expect from us.

We thank you for your understanding and continued support during this challenging time.


[Your Name] [Your Title]

(How many average lawyers does it take to write a layoff notice?)


The Truth 

Come on now. Take some responsibility. Whoever told you management was easy? If the folks in charge were:


    • Paying attention to the strategic direction of the company,


    • Regularly adjusting KPIs at the company employee/position level to align them with the strategic direction of the company,


    • Emphasizing HR productivity over margins,


    • Giving employees the tools and the training to meet these KPI’s, then: 

Mass layoffs would not be required except in instances of crisis, and the inability of managers or executives to navigate that crisis. Crisis management and crisis management preparation is part of the job if you have a management role. So, have a plan. Do not wing it. ‘Plenty of information on the internet to get you going.

If you have clear KPI’s by employee that reflect your company’s strategy, and manage your people and your resources to achieve those KPIs, your people will not be laid off in an economic slowdown. Quite the opposite – They will be promoted.  You’ll have succeeded as a manager.

And, maybe this is obvious, the employees that can’t manage to meet KPIs should have been let go or reassigned before the crisis. You’d have had clear, actionable reasons why. Whoever told you management was easy?


The Honest 

That’s not where you are so now what?

Let’s just say you haven’t done anything like this yet. Here are the options left for you and your people: 

Explore alternative options before resorting to layoffs. Here are some we have seen work well enough to recommend. We ranked them too.

#1 – Reduce work hours: One way to avoid layoffs is to reduce work hours. This could mean reducing the number of workdays or hours worked per day. By reducing work hours, the company can save on labor costs while keeping employees on the payroll.

#2 – Implement a pay cut: While this may not be the most popular option, implementing a temporary pay cut can help the company save money without laying off employees. However, it’s important to communicate with employees about the reasons for the pay cut and how long it’s expected to last. And, from a more hardened perspective, creates attrition. KPIs don’t change.

#3 – Explore government programs: Depending on the country or region, there may be government programs available to help companies avoid layoffs. For example, in some countries, there are subsidies available for companies that reduce work hours or offer training programs to employees.


Layoffs should be a last resort for companies. By exploring alternative options such as reducing work hours, implementing a pay cut, exploring government programs, investing in training and development, and seeking input from employees, companies can avoid layoffs while staying financially viable. The crisis will pass and loyal employees will be hungry to perform in a relaunch.


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