If the last couple of years has taught us anything, it is that we must become more comfortable managing and working through uncertainty. Earlier this year the XM Institute named 2022 as the Year of Agility because we know one of the best ways to successfully navigate through times of uncertainty is to rapidly adapt to change.

One mitigating measure that organizations may deploy when faced with economic disruption is to downsize the workforce. This process is almost always difficult and emotionally taxing. The resulting impact on individuals and the organization can be devastating if it’s not handled well. When facing the tough decision to downsize, here are some tips to ensure the most positive long-term outcomes:

  • Tip #1: Communicate honestly and with empathy. Many downsizing decisions need to be made fast, in response to changing economic conditions. While you may need to move quickly, do not skip the step of building your communications plan, considering how different customers and employee segments will receive the news. While you may not have all of the details completely figured out, share what you can so that people can begin to process the change and feel that leaders genuinely care about people. 
  • Tip #2 Choose certainty over uncertainty. Over the past few years, we have learned that humans respond much better to certainty than uncertainty, even if certainty means bad news. You should not wait until you have every fine detail worked out before communicating with your employees – chances are they already have a sense of something on the horizon. Left unchecked, uncertainty can breed deepening negative sentiment as people assume the worst. We recommend acknowledging the current situation (don’t delay or avoid it), clearly sharing what is certain (even if it is bad news), and being open about any known timelines or how decisions will be made.
  • Tip #3: Thoughtfully design the employee transition journey. Once the decision to downsize your workforce is made, it is often quick to be implemented to expedite the financial needs of the organization. Instead of being quick to act, build in a step to thoughtfully design the transition journey for departing employees. Remember that your remaining employees will observe how you treat their peers, influencing their ongoing motivation to carry you through this next phase. Identify key moments of the transition where impacted employees may need greater levels of empathy, compassion, and resources. For example, the separation or furlough conversation should be personal and demonstrate empathy. Don’t leave it to frontline managers or HR to deliver this message alone – senior leaders should show up in these moments. 
  • Tip #4: Celebrate and endorse the impacted talent. Downsizing an organization is not something that anyone wants to do, so remember that your departing talent isn’t leaving because they were poor performers. They may have been some of your biggest supporters and delivered massive value during their tenure.  Having seen organizations go through this process in the early stages of the pandemic, a few companies chose to create talent lists or featured impacted employees on LinkedIn to share with recruiters or other hiring companies, proactively supporting them on their job search. Endorsing your impacted talent demonstrated compassion, accountability, and integrity in a difficult time.  
  • Tip #5: Re-engage remaining employees. It’s not just departing employees who are impacted by this change. Employees who stay with the organization will be processing emotions such as grief of losing a coworker, frustration, fear, stress, lower motivation, and possibly even guilt. Getting in front of this is one of the most important things you can do as an organization to ensure you can move forward with an engaged workforce. Leaders taking time to have personal conversations with employees to see how they are doing, ensuring the c-suite is visible, and listening to employees should be of the highest priority. This must be done with authenticity, or it will backfire. These remaining employees need to feel heard, validated, appreciated, and inspired and know that not only are you listening but are experiencing this with them.
  • Tip #6: Smartly redistribute the workload. Downsizing the workforce also requires pruning against priorities and redistributing workloads – a reduced staff count cannot deliver the same outputs at the same quality as before, without raising the risk of staff burnout. Take the opportunity to rethink your future direction and stop non-essential efforts. It’s often much better to cut entire secondary efforts than to enact across-the-board cuts. But do not make these reductions at the expense of innovation – continue to incubate for the future by identifying some innovative projects that will keep your organization energized and allow it to exit this period of uncertainty with significant momentum.
  • Tip #7: Stay true to your values.  One of the biggest drivers of customer and employee loyalty is operating with integrity and sticking to your core values and brand promise. As  Martin Luther King, Jr. said, “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.” Align your leadership team around the things that you are unwilling to compromise on. As you make these uncomfortable decisions, communicate the rationale to illustrate how you use the organization’s values as important guardrails. 


The bottom line: Focus on human experience to minimize the negative impact of downsizing.

Greg Chase, XMP, CCXP, is an XM Catalyst with the Qualtrics XM Institute

Dr. Cecelia Herbert, XMP, PsyD, is a Principal Catalyst for Qualtrics XM Institute