How to Downsize Your Workforce – Without Destroying Staff Morale

Downsizing is a negative, stressful and potentially disastrous process that may result in long-term damage to your business. Unfortunately, a business may have to downsize in order to survive and remain viable. Organizations will consider downsizing as an option when two big companies merge, the economy slows down or due to negative market or low sales growth.

Besides cost to the business's own bottom line, downsizing has a negative impact on the employees that are retrenched, as well as the employees that remain. However, by focusing on the employees that are still with you, through careful planning, clear and concise communication and a lot of empathy, downsizing can be managed effectively without leaving your team lacking motivation. We'll cover some of the effects of downsizing on employee morale, as well as how to boost morale after layoffs have occurred.


The communication structures that are put in place during downsizing play a vital role in the success or failure of the process. Custom-created video messages, websites, individual letters and notice boards are effective tools that can be used to communicate with the workforce. A reduction in communication, or even widespread miscommunication can be one of the more drastic effects of downsizing on employee morale. It's important to have leaders who know how to effectively communicate in order to prevent that as much as possible.

Engage with Employees

The effects of downsizing on employee morale can be difficult to manage, which means it is crucial that a company engage with employees during this time. When engaging with employees, a company can explain the decision, the process that will be followed, and alternative options.

Investigate Alternative Options

Employers are responsible for the well-being of their employees, and it is therefore important to investigate any alternative options that may impact on the downsizing process. Flex-time, short-term contracts, reduction in salary, limited benefits, and the outsourcing of non-core functions can reduce the number of employees that will lose their jobs.

Share the Operational Vision

It is only natural that the employees that remain with the company will be concerned about job security. Sharing the operational vision of the company with employees will allow them to understand where the company is heading. In addition, employees can then commit themselves to the tasks that are required in order for the company to survive and grow.

Provide Assistance to Manage the Effects of Downsizing on Employee Morale

The employees that remain will look closely at how the company deals with the employees that are retrenched. If the company offers the affected staff assistance with finding new jobs, or retrenchment packages that exceed the minimum requirements, it will positively impact the morale of the remaining staff.

Morale is a vital component of a successful business, and special attention is needed to manage the effects of downsizing on employee morale. Effective communication that is clear, concise and addresses all of the concerns that employees may have is crucial to the success of the process. Indeed, companies that show openness throughout this process find that they retain loyalty and trust, and that employees are more supportive of the transition.

Boost Morale After Layoffs

Of course, you may have found this page because downsizing has already occurred, and now you need to figure out how to boost morale after layoffs have taken a toll on your workplace engagement and productivity. Make sure you have trust and transparency amongst your remaining employees. Ensure that they know they have a voice and that there are open lines of communication going forward. Develop a plan going forward that will address any restructuring or changing of job titles and workloads. There is a clear relationship between employee morale, productivity, and retention, which means you'll need to be proactive and not reactive in order to keep your remaining employees engaged and productive.

If you're looking to address the effects of downsizing on employee morale, or even need to find some ideas to boost morale after layoffs have already taken a toll -- we're here to help. Our team of experts is here to help your organization address the unique challenges presented. Get started by clicking here.

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