How to Lay Off an Employee with Compassion and Professionalism

Key takeaways

• Poorly managed layoffs cause up to 20% productivity decline among remaining staff, directly hurting business performance.
• Leaders who visibly own layoff decisions maintain trust, while those who hide behind HR damage credibility permanently.
• Strong severance packages and career support turn departing employees into brand advocates rather than detractors.
• Clear communication with remaining team members prevents the fear-driven voluntary turnover that often follows reductions.
• Companies handling layoffs compassionately recover faster and maintain stronger market performance long-term.

Workforce reductions represent a critical leadership moment that impacts far more than your bottom line. Research from Harvard Business Review shows remaining staff often experience a 20% productivity decline after layoffs. What matters most isn’t just the decision to cut positions, but how you execute that decision. For CEOs, approaching the process of how to lay off employees with compassion and professionalism protects trust, maintains stability, and sets the stage for recovery.

Why investing in compassionate layoffs is smart business

The financial case for handling layoffs with care goes far beyond goodwill—it directly impacts your organization’s recovery and future performance. The financial case for compassionate layoffs is compelling. Despite the immediate savings, poorly handled cuts create expensive problems:

• Lower productivity (up to 20% decline)
• Increased voluntary turnover of key talent
• Erosion of institutional knowledge
• Higher recruitment and training costs
• Damaged customer relationships
• Weakened innovation pipeline

Layoffs test your credibility as a leader. One survey found employee confidence in leadership dropped by 10.5 percentage points following layoffs. Culture Amp research shows it takes 12-18 months for employee engagement to recover after reductions—if it ever does. This trust gap directly affects your ability to lead the organization through recovery. 

Knowledge at Wharton cites decades of research showing mass layoffs generally do not lead to improved profitability. Companies often see initial cost benefits but then suffer from reduced innovation, weaker customer relationships, and lower productivity that erase those gains.

Your approach to layoffs shapes your market reputation in lasting ways. In today’s connected world, how you treat departing employees quickly becomes public through social media and review sites. This directly impacts your ability to attract talent and customers in the future. Compassionate practices protect this vital business asset even during difficult transitions.

Executing layoffs with compassion and professionalism

Successful workforce reductions require a structured approach that balances business needs with human dignity. Understanding layoffs versus firing is also crucial for strategic workforce management. The following framework addresses the entire layoff lifecycle—from initial planning through the aftermath with both departing and remaining employees.

Plan carefully to show respect and professionalism

Start by treating layoffs as your last option. First explore hiring freezes, cost cuts, and role changes. When cuts become necessary, create fair selection criteria based on business needs.

Get personally involved and understand the human impact. Create a clear timeline, prepare necessary documents, and align your approach with company values. Ensuring HR compliance protects both your company and employees during this transition.

A professional layoff plan includes:

1. Clearly documented selection criteria
2. Legal compliance checklist
3. Comprehensive communications strategy
4. Support package details
5. Stabilization plan for remaining team members

Show visible leadership to build trust

As a leader, especially the CEO, stay visible throughout the layoff process. Explain the reasons openly and take personal responsibility rather than hiding behind others. 

Set the right tone from the top. Consider symbolic actions that show shared sacrifice. Zoom’s CEO Eric Yuan took a 98% pay cut for the coming year and forfeited his bonus during the company’s 15% workforce reduction. His leadership team also took 20% pay cuts, demonstrating that everyone was feeling the impact.

Give your managers proper support. Many have never had to lay someone off and find it emotionally difficult. Provide them with clear talking points that balance compassion with clarity. Run practice sessions if needed. This visible, accountable leadership preserves trust during a time when it’s most vulnerable.

Communicate with empathy to uphold dignity

“It’s not a mass email. It’s certainly not deactivating people’s badges before they walk in the door, which we’ve seen… Allowing for 1:1 conversations and goodbyes even if it means assuming a little more risk as a business, it goes a long way in making people feel like human beings whose contributions were valued.”

– Michele Bousquet of Strava –

How you deliver the layoff message leaves a lasting impression. Knowing what to say when laying off an employee is crucial. Tell people one-on-one, either in person or by video. Be clear about the decision but also acknowledge their contributions and the difficulty of the moment. Elements of a respectful layoff conversation:

• Direct communication of the decision early in the conversation
• Acknowledgment of the person’s contributions and value
• Clear explanation of the business reasons (not personal performance)
• Space for questions and emotional response
• Detailed information on next steps and support
• Genuine expression of gratitude and well-wishes

Listen to their response. Let them ask questions or express feelings. Explain severance and next steps clearly, presenting it as support rather than just legal requirements. This approach ensures people feel respected even during this difficult conversation. 

Provide real support to show genuine care

Actions speak louder than words when demonstrating compassion. Offer meaningful severance and consider extending health benefits beyond the last day. Airbnb provided at least 14 weeks of severance pay plus an extra week per year of service and a full year of health insurance coverage for U.S. employees during their 2020 layoffs.

Help departing employees find new jobs. Microsoft offered above-market severance pay, six months of continued healthcare, six months of additional stock vesting, and job placement assistance during their 2023 reduction. Airbnb created an alumni talent directory and placement team to connect former staff with new opportunities. These practical measures help people land on their feet.

Comprehensive support might include:

• Financial cushion (severance pay based on tenure)
• Extended health benefits coverage
• Outplacement services and career coaching
• Alumni networking resources and job referrals
• Mental health counseling
• Technical tools (keeping laptops, phones)
• Letters of recommendation
• Exit interviews that show you value their insight

Small gestures matter too. Airbnb let departing staff keep their company laptops for job hunting. Such touches show you still value these individuals as people. Comprehensive support turns potentially bitter former employees into possible brand advocates who speak well of your company despite their departure.

Support remaining employees to rebuild stability

After layoffs, focus intensely on your remaining team. The emotional health of your staff directly affects your recovery timeline.

Address concerns by acknowledging the difficulty and being transparent about why the cuts happened. Answer the question in everyone’s mind: “Is my job safe now?”

Check in regularly with your team and offer support resources. Reinforce your company direction and how each person fits into the future vision. Learn more about boosting engagement after layoffs to accelerate recovery.

Common pitfalls that undermine compassion and professionalism

Many companies damage trust by using impersonal layoff methods. During the 2022-2023 tech downturn, mass layoff announcements via email and employees discovering their termination only when locked out of systems became commonplace. These approaches prioritize speed and convenience over respect, creating lasting damage to company reputation.

Leadership absence during layoffs sends a devastating message. Many executives shirk responsibility and let managers do the dirty work. This disappearing act makes leaders appear cowardly and uncaring precisely when visibility matters most, permanently undermining their credibility.

Remote work creates special challenges for compassionate layoffs. While notifying everyone simultaneously prevents rumors, people still need personal connection. The best approach combines an official written notice with immediate live conversations, showing respect even when face-to-face meetings aren’t possible.

Multiple rounds of layoffs create a toxic environment of constant fear. When cuts become a repeated pattern, loyalty becomes “almost impossible to sustain.” This ongoing uncertainty pushes your best talent out the door as high performers seek stability elsewhere.

Pitfalls to avoid during layoffs:

1. Mass notification methods (group emails, calls)
2. Delegating responsibility entirely to HR or middle managers
3. Cutting corners on severance to save money
4. Treating departing employees as security risks
5. Failing to communicate clearly with remaining staff
6. Conducting multiple small rounds instead of one decisive cut
7. Ignoring the emotional impact on managers delivering the news

Leveraging HR consulting expertise can help you navigate these complex situations while maintaining your company’s values.

How you lay off an employee defines your leadership and reveals your true values. The best way to lay off an employee involves compassion, transparency, and support. Companies that handle reductions with respect see faster rebounds and better performance. Trust is your most valuable asset, and nothing tests it more than how you handle letting people go. Treat this moment as an opportunity to demonstrate your values rather than compromise them.