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. However, the consequences don’t stop at productivity. An unprofessional or non-compliant process for laying off an employee can expose the company to severe legal risks, leading to costly lawsuits and an employer branding crisis that is difficult to recover from.

Why investing in compassionate layoffs is smart business

Knowledge at Wharton, The costs of replacing high performers who leave after witnessing poor layoff practices typically exceed the initial payroll savings from the workforce reduction itself.

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. 

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.

1. Plan carefully to show respect and professionalism

The success of this challenging conversation hinges on preparation. This is the stage where the HR and leadership must collaborate closely to ensure every aspect is carefully considered—from the rationale and selection criteria to costs and official paperwork.

• Define the rationale and establish fair criteria: First, clarify the business reason for the layoffs (e.g., restructuring, financial performance, technological changes). Based on this, establish a transparent and objective set of selection criteria to avoid any claims of discrimination. Treat layoffs as a last resort, only after considering alternatives like hiring freezes or reducing operational expenses.
• Prepare comprehensive legal documentation: Each impacted employee requires a dedicated documentation package. This must include the official notice of termination, a detailed breakdown of the final salary, payment for accrued vacation days, and most importantly, the full severance package as required by law and company policy. Ensuring HR compliance protects both your company and employees during this transition.
• Forecast all associated costs: The layoff budget should include not only salaries and severance payments but also the costs for any additional support services, such as outplacement programs or extended health insurance coverage.
• Equip and train direct managers: Provide managers with clear talking points, a guide to frequently asked questions (FAQs), and conduct training sessions, including role-playing scenarios if necessary.

2. 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.

3. 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.

• Select a discreet, neutral, and private meeting room to ensure the employee feels safe to express their emotions.
• Consider scheduling the meeting for the end of the workday. This gives the employee the space and privacy to process the news afterward.
• The conversation should be attended by the employee’s direct manager (to show recognition and take responsibility) and an HR representative (to answer any questions about policies, procedures, and legal matters).

Be clear about the decision but also acknowledge their contributions and the difficulty of the moment. Avoid circling the topic, which can increase anxiety. 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

Some examples for delivering the news clearly and directly, but with a gentle tone. 

• To announce the decision: “After careful consideration of our departmental restructuring, we regret to inform you that we must terminate your employment contract, effective [End Date]…”
• To acknowledge contributions: “We want to emphasize that this decision is not a reflection of your performance. The company truly recognizes and appreciates your contributions, especially your work on the X project…”
• To show empathy: “We understand this is very difficult news to receive, and we are truly sorry that we have to make this decision.”
• To offer support: “We know this is a difficult situation. If you need any support with your job search, paperwork, or career advice, the company is ready to assist.”
• To express gratitude: “We sincerely thank you for your contributions during your time here. We hope for your understanding and cooperation during the handover process.”
• To close the conversation: “Thank you once again. We wish you the very best in your future endeavors and hope our paths may cross again.”

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. 

Notifying an employee of a layoff via email or text is not a recommended practice. Receiving such critical news through a text-based message can make an employee feel disrespected, cause psychological shock, and create a lasting negative impression. Email or text should only serve as a supplementary form of communication to formally confirm the details that have already been discussed in person.

4. 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.

5. 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

In a sensitive situation like a layoff, a single misstep can undo years of trust. Here are the critical blunders to steer clear of:

1. 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.
2. 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.
3. The “death by a thousand cuts” approach. 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.
4. Treating departing employees like criminals. While securing company assets is necessary, the way it’s done speaks volumes. Escorting people out immediately, disabling accounts abruptly, or treating them like security threats is deeply disrespectful. It signals a profound lack of trust and poisons the well for everyone who remains, showing them that their contributions can be dismissed in an instant.
5. Skimping on the severance package. Attempting to cut corners on severance and outplacement support is a shortsighted move that will cost you more in the long run. It’s an open invitation for legal challenges and immediately earns you a reputation as a company that doesn’t value its people. The damage to your employer brand will far outweigh any trivial, short-term savings.
6. Forgetting the people on the front lines. The managers who have to deliver the news are under immense psychological strain. Throwing them into these conversations without proper training, talking points, or emotional support is a recipe for disaster. It leads to inconsistent, cold, and poorly handled notifications that undermine the entire process and burn out the very leaders you need to guide the remaining team.

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.