Layoffs are one of the most difficult moments any company can face. Yet, while much attention is placed on the decision itself, what often goes overlooked is the critical period that follows—the recovery. This is where the real work begins.
For employees who remain after a layoff, the workplace can suddenly feel unfamiliar and uncertain. The most pressing question for leaders is simple: What now?
And this is not merely about workplace morale. The damage is tangible. One study found that after layoffs, confidence in the company drops by 17%. Belief in career growth falls by 12%, and trust in leadership decreases by 10%. In other words, organizations are not just left with smaller teams—they are left with a trust deficit. If left unaddressed, this deficit can quietly erode productivity, engagement, and retention for months, or even years.
To move from crisis back to confidence, leaders must take deliberate steps. Here is a five-part playbook for rebuilding trust and strengthening culture after layoffs.
Trust breaks in two distinct ways:
Layoffs damage both forms of trust. As Wharton professor Peter Cappelli notes, the lingering uncertainty is often the single greatest fear for remaining employees. Without addressing this, teams cannot move forward.
The priority after layoffs is not hiring new talent—it is re-engaging the employees who remain. In many cases, they grapple with survivor’s guilt, a mix of relief, grief, and anxiety. Ignoring these emotions is a critical mistake.
Re-engagement requires a four-step approach:
Transparency is the most powerful tool leaders have to rebuild trust. Employees quickly recognize vague corporate jargon—and it only worsens distrust. Instead, communication should be grounded in four pillars:
Hiring new employees in the aftermath of layoffs requires exceptional care. The worst mistake is the bait and switch—promising one role but piling on unexpected responsibilities due to ongoing chaos.
Smart onboarding includes:
A common question arises: should companies rehire former employees—so-called boomerang employees? Doing so can signal loyalty and strengthen trust, but it requires careful evaluation of resentment and fairness in the hiring process.
Ultimately, recovery from layoffs is not about grand gestures or one-time announcements. True rebuilding comes from consistent, small actions over time: honoring commitments, listening actively, and treating people with dignity.
A layoff represents a moment of truth for any organization. Leaders must ask themselves: will we simply patch things up to survive, or will we seize the opportunity to become stronger, more transparent, and more resilient than before?