How Reductions in Force Impact Employee Morale (And What to Do About It)
Reductions in force (RIFs) may seem like the obvious way to address financial and economic concerns, but companies should be mindful of how layoffs impact the remaining employees. Although managing a smaller workforce may sound easier, employers must take proactive steps to ensure employee morale doesn’t suffer more than it has to.
During layoffs, the focus is understandably on the employees who are losing their jobs—but employers need to consider how the experience will affect all employees. As detailed in this article, employers must pay close attention to the employees who aren’t being laid off—the “surviving” employees.
In this article, we identify three ways that RIFs impact surviving employees and offer tips to help maintain employee morale during a workforce reduction.
3 Key Impacts of Layoffs
As companies evaluate whether a reduction in force (RIF) is the best solution, it’s important to consider the indirect effects that layoffs have on surviving employees. Here, we break down three common issues that arise after layoffs: reduced employee engagement, loss of productivity, and impact on corporate brand.
Reduced Employee Engagement
It’s no surprise that surviving employees experience their own negative emotions after layoffs. For one, it’s common for employees to think their jobs may be in jeopardy—which is enough to keep anyone awake at night. In addition to questioning their job security, many surviving employees grieve the loss of their colleagues and may even feel guilty that they made the cut.
It’s also normal for surviving employees to feel angry after layoffs, especially if the job cuts came as a complete shock. This is further amplified when the layoffs were poorly communicated, which can also affect employee trust in the organization.
Many employees are also left wondering how the layoffs will impact their workloads, which can cause significant anxiety.
In 2024, Harvard Business Review studied 146 companies that conducted layoffs between March 2020 and November 2022. Surveys of employee engagement before and after layoffs illustrated the lasting negative effects of workforce reduction. The higher employee engagement is prior to layoffs, the more likely it is to drop after layoffs. The most significant declines in employee engagement were seen in companies that scored in the top 10% of engagement before conducting layoffs.
The surveys also illustrated significant declines in three key areas of engagement:
Company confidence dropped by 16.9 percentage points,
Belief in career opportunities dropped by 12.1 percentage points, and
Confidence in leadership dropped 10.5 percentage points.
Harvard Business Review’s research also indicated that it takes anywhere from 12 to 24 months for engagement to bounce back to pre-layoff levels. Since the impact on employee engagement is long lived, RIFs should be handled with care.
Loss of Productivity
Data shows that layoffs negatively impact productivity—and not just due to reduced headcount. As surviving employees navigate the barrage of emotions that follows a layoff, their productivity levels inevitably decrease. Sometimes it’s an indirect effect of the RIF, and other times it’s more deliberate—a way surviving employees can make a point during a difficult situation.
Leadership IQ surveyed more than 4,000 employees who survived layoffs and found substantial drops in productivity.
74% of surviving employees said their productivity declined after company layoffs, and
64% of respondents believed their colleagues’ productivity had declined.
Another study by Glassdoor evaluated 197 companies that conducted layoffs from 2021 to 2025. The study estimated that, altogether, the companies lost approximately $20.8 billion in the first year after layoffs. Active disengagement increased by 26%, and there was a 40% jump in the number of current employees searching for new opportunities—“and those job seekers are disproportionately key talent,” the survey found. The $20.8-billion estimate is based on the costs of 5.2% of payroll in the year following a layoff.
If financial woes led to layoffs, which is often the case, companies can’t afford to lose more money to lost productivity—one of the many hidden costs of layoffs.
Impact on Corporate Brand
Layoffs also impact the corporate brand, which can make it more difficult for companies to attract new talent.
Data from the Leadership IQ survey referenced above also indicated that 87% of employees who survive layoffs are “less likely to recommend their organization as a great organization to work for.”
The previously mentioned Glassdoor study used layoff data from two sources—layoffs.fyi and WARN Act filings—to identify significant layoffs that occurred between 2021 and 2025. This resulted in a list of 304 layoff events from 197 companies. Glassdoor then combined this data with employee reviews from the 197 companies that conducted layoffs.
Here are some key takeaways related to how layoffs impact corporate brand:
Glassdoor ratings drop by 0.13 stars (out of 5) after layoffs.
Surviving employees showed a .13-star drop in their Glassdoor ratings after layoffs, which significantly impacts employer standings. The greatest negative impact was noted in sub-ratings for company leadership, career growth, and culture/values.
Surviving employee ratings take more than two years to rebound.
The data indicated that current employee ratings drop when layoffs are announced and remain low for the first year after the workforce reduction. Recovery begins in the second year, and Glassdoor analysts estimated that companies would “be back to pre-layoff levels after 32 months.”
Multiple rounds of layoffs are even more harmful.
Multi-round layoffs have twice the impact on surviving employee reviews in the first four months after the second layoff. It’s important to note that key talent, managers, and new hires are the three employee groups whose ratings are most negatively impacted.
Job seekers, investors, and other stakeholders often look to sites like Glassdoor to get an inside look at what goes on behind closed doors. That’s why it’s crucial for employers to have a post-layoff plan.
How to Support Surviving Employees
The RIF process itself is both stressful and tedious—and it’s not over once the laid-off employees are gone. One common post-layoff mistake that companies make is to carry on as though nothing happened. To limit the negative impacts of layoffs, employers need to keep surviving employees top of mind.
Communicate Openly with Employees
Communication is imperative during times of transition, and employees often pay close attention after layoffs. It’s important that people at all levels of the organization feel seen during what can feel like organizational chaos. This means that leadership should support managers so they, in turn, are well positioned to support their employees.
Above all, communication should be authentic and human—not overly saccharine or too corporate. Here are some guidelines to help you strike the right balance when communicating after a RIF:
Acknowledge that it’s a difficult situation and share what you’re feeling if appropriate
Proactively address changes in roles and responsibilities
Emphasize the importance of working together and leaning on each other
Remember the Leadership IQ survey results, highlighted earlier, that illustrated significant drops in productivity after layoffs? Surviving employees who gave their managers high ratings in the categories of Visibility, Approachability, and Candor were 72% less likely to report a decrease in their own productivity. In other words, don’t ignore the obvious elephant in the room.
When it comes to RIF best practices, communication should be one of the top priorities.
Encourage Employee Feedback
Be sure to give surviving employees a forum to voice their concerns after a significant event like a RIF. Here are some ways employers can encourage surviving employees to speak up:
Regular check-ins: Informally check in with employees and ask how they’re feeling about the recent changes. Ask what concerns they have. Make it known that you’re available—and that you mean it. This means that you don’t ask once and mark it off your to-do list, nor do you hide away in your office. Keeping checking on employees, especially if you notice changes in their demeanor or productivity.
Pulse surveys: Companies may want to conduct organizational pulse surveys to get a real-time gauge of how employees are feeling after layoffs. These surveys work best when they’re short and anonymous, providing employees an opportunity to express how they’re feeling. But don’t conduct these surveys unless you plan to act on the results.
Stay interviews: These proactive interviews help companies understand what makes employees want to stay at their organization—and what would drive them to leave. This allows for more in-depth conversation and provides a forum for employees to voice their concerns.
Create opportunities for employees to provide feedback and encourage them to do so. Continue to follow up, too, because it may take some time for the initial shock to wear off.
Show That You Care
Don’t just rely on talking points to show surviving employees that they matter. Make sure the company’s actions emphasize this as a priority, too. In addition to the communication tips above, here are some tangible ways to demonstrate that you care:
Look for opportunities to recognize employees for their hard work, especially if they’ve stepped up in the aftermath of layoffs.
Invest in employees by providing opportunities to learn new skills.
If possible, consider compensation adjustments, especially for employees who have taken on additional responsibilities.
Communication goes a long way, but it can also feel empty if it’s not supported by actions.
Conclusion
When determining whether a RIF is the best solution, employers can’t forget about the unintended consequences of layoffs. As illustrated throughout this article, employee morale is often in jeopardy after layoffs. During the RIF planning process, companies should proactively develop a plan to lessen the effects layoffs have on employee engagement, productivity, and the corporate brand.
With offboarding technology like Onwards HR in place, companies can spend less time on administrative tasks and more time caring for their most important resource—their people.
