A layoff or any employee exit is more than a business decision, it is a defining moment of leadership. How organizations handle offboarding communicates volumes about their values, culture, and long-term vision. It shapes how departing employees remember the company and strongly influences the trust and engagement of those who remain.
The Lasting Impact of Layoffs
Layoffs rank among the top life stressors people experience, often cited as the seventh most impactful event in an individual’s life (Paul & Moser, 2015). These moments leave emotional and psychological scars that traditional outplacement services alone do not address.
Research shows that when organizations embrace an emotion-focused coping approach, offering practical help alongside emotional support, they reduce trauma and foster resilience in departing employees (Probst, 2016).
Beyond the human impact, layoffs carry significant business risks. Harvard Business Review’s recent research highlights the long-term costs of layoffs: damaged trust in leadership, weakened employer brand, and hindered ability to attract top talent (HBR, 2024). In fact, studies find that 81% of companies experience brand damage after layoffs, while 70% see negative effects on future recruiting efforts (Culture Amp, 2021). A drop of over 10% in confidence in leadership further underscores how pivotal this moment is for organizational reputation (HBR, 2024).
Offboarding:An Underappreciated Leadership Moment
Despite its critical importance, offboarding is often neglected or handled poorly, damaging employee morale and brand perception. Thoughtful offboarding can, however, transform a difficult transition into a demonstration of integrity, respect, and care. Employees who leave on good terms are 45% more likely to recommend their former employer and become positive brand ambassadors as alumni (Newployee, 2024).
Treating exiting employees with dignity also benefits those who remain. Research shows that surviving employees’ engagement stays stronger when they see that their colleagues are supported compassionately during layoffs (HBR, 2009). This reinforces organizational trust, morale, and productivity during turbulent times (Randstad RiseSmart, 2023).
The Business Case for Compassionate Offboarding
Many companies focus solely on problem-focused coping strategies: resume building, job search assistance, and traditional outplacement programs. While important, these are not enough. Emotional support addressing grief, identity loss, and uncertainty is equally vital (Probst, 2016). Providing holistic offboarding helps:
- Preserve your employer brand by reducing negative online reviews and reputation damage.
- Maintain morale and engagement among survivors who witness genuine care for those leaving.
- Build long-term goodwill through positive alumni relations and potential future rehires.
- Reduce operational risks such as data breaches or compliance failures linked to rushed exits (Newployee, 2024).
A well-structured offboarding process mirrors onboarding in its care and intention. It includes clear communication, dignified transitions, knowledge transfer, and continued support (HBR, 2022). This approach shows leadership courage, models company values in action, and strengthens culture, even in difficult moments.
Leading with Integrity Means Leading Through the Exit
Layoffs and offboarding are leadership tests. The way you “let people go” defines how they, and your whole workforce, will remember you. It’s an opportunity to reinforce trust and demonstrate that your organization values humanity as much as business outcomes.
By investing in a compassionate, evidence-based offboarding process, companies turn one of the toughest moments into a leadership moment. This is not just about being kind; it’s a strategic imperative that preserves your brand, culture, and ability to attract and retain great talent.
For leaders navigating these challenges, the message is clear: How you offboard is how you lead. Thoughtfully managing exits with care and respect shows the world, and your workforce, that leadership is grounded in integrity.
If you’re facing a layoff, check out our companion post here and you can find supportive resources here.
