Why companies must plan exits as carefully as onboarding

Layoffs are rising globally as companies turn to AI for efficiency and cost-cutting. While beneficial in the short term, mass layoffs harm employee morale and well-being. A proposed FRAME-WORK emphasises empathy and positive employee experience during layoffs to preserve hope and resilience for the future

By Manjari Srivastava

Published: Aug 19, 2025 03:12:11 PM IST

Updated: Aug 19, 2025 03:18:20 PM IST

Layoffs have an emotional and physical impact on employees, regardless of whether they are due to technological, financial or operational efficiency. Image: Shutterstock

Corporate layoffs have become a prevalent organisational phenomenon, affecting employees both worldwide and locally. To the extent that it would not be incorrect to refer to this phenomenon as "Layoff Tsunami." Unlike the financial crisis of 2008-2009, the underlying logic for these layoffs is change as a result of technological innovation and the shift to AI.

According to news reports, TCS has announced plans to slash 2 percent of its global workforce by 2025, which might amount to more than 12,000 individuals. Employees from industry leaders such as Amazon, Fidelity, NetApp, IBM, Google, Salesforce, HP Inc., Hewlett Packard Enterprise, Microsoft, Intel, and others were also affected by this "Layoff Tsunami." The figures are mind-boggling: anything from 500 to 24,500 every fiscal year. Even Indian firms such as Gupshup, VerSe Inovation, and Ola Electric have made headlines by laying off employees.

The primary justification for layoffs is leveraging AI to enhance operations, with the rest of the reasoning being the effect. This pushes corporations to reduce headcounts, restructure responsibilities, and rebalance teams' positions across worldwide locations.

Layoffs have an emotional and physical impact on employees, regardless of whether they are due to technological, financial or operational efficiency. People who remain in the organisation feel the influence. It is also an issue of business reputation. Organisations must strive for the "soft landing strategy."

Nokia learned this lesson the hard way. Impacted by the 2008 global financial crisis, Nokia made the decision to shut down its Bochum plant in Germany, which would impact 2,300 plant employees. As mentioned in a Harvard Business Review article on downsizing (2018), the decision was met with nationwide protests, hostility, and government intervention. "The shutdown cost was €200 million—more than €80,000 per laid-off employee—not including the ripple effects of the boycott and bad press." It lost market share in Germany; it was estimated that "from 2008 to 2010 Nokia lost €700 million in sales and €100 million in profits." Learning from past mistakes, in 2011, when Nokia decided to lay off employees due to restructuring the company, it implemented a process that would care for them. Various research studies show that layoffs cause voluntary turnover, low morale among survivors, low engagement, and a drop in job performance and satisfaction. Companies may see short-term gains, but they will eventually lose money due to time spent on recruitment and training, tacit knowledge, a network of relationships, and, of course, output loss in the long run.

As corporate restructuring and managing uncertainties are part and parcel of the organisation's life cycle, it should be rooted in strong values and philosophy lived by the organisation. They need to question themselves about their values for employees. The organisation's reflection on employee contributions to its success is desirable. There is a need to consider the fair exchange that must occur between employees and the company. Can an organisation create a positive experience during a layoff, similar to employee onboarding? Can they be prepared for a future career?

To manage inevitable uncertainties that may force organisations to reduce jobs, careful and empathic planning should be considered. A FRAME-WORK is proposed for organisations to adapt, with an effort towards bringing positive energy and hope for the future during large-scale layoffs.

Also read: Layoffs surging in a strong economy? Advice for navigating uncertain times

"FRAME-WORK" for employee layoff experience:

F = Fairness: Fairness to the employees being laid off is perhaps the most important factor to be remembered.. This means organisational values should be the guiding principles, and communication across the organisation should be fair and transparent with employees. Provide them with the necessary information. Be transparent about the reason for laying off and the process that will follow.

R = Respect: The affected employees need genuine respect. Ensure respect by allocating the necessary financial and human resources for a dignified layoff process that treats people with integrity. Be empathetic and respectful. Implement a review mechanism to gather employee feedback on how the process was handled.

A = Administration: The actual process of layoff should be well administered and monitored. This would also require building awareness among all stakeholders, including both affected and unaffected employees. Assistance should be provided to employees going through a layoff. Ensure that the paperwork is done efficiently.

M = Management: The leadership team should be responsible for overseeing the layoff execution. Driven by the organisation's value system, the top management team should provide assurance in handling the process gently.

E = Empathy and Engagement: This means support not only during the layoff process but also post-layoff process. The mental and physical well-being of laid-off employees should be a priority for organisations. The process must have a blueprint to provide emotional support via counselling or creating peer group support. Financial support must also be there in the form of severance pay and transition benefits. This may reduce the financial stress arising from uncertainties.

Organisations can also plan for career support by implementing reskilling and upskilling programs, as well as coaching, to ensure that employees are well-prepared for future opportunities.

WORK=The work related to managing layoff as an effort towards creating a positive experience can be divided into three phases,

The pre-layoff phase
The layoff process
Post-layoff support

The practices in the pre-layoff phase should include all the preparation and planning for a comprehensive communication on severance packages, outplacement support and legal compliance. Having a support service for employees managing layoffs, and logistical planning with HR, Finance and other vital teams is crucial at this stage.

During the layoff process, care should be taken to deliver the news in an empathic and respectful manner. Maintaining employee dignity is of utmost importance. Provide peer or counsellor support to process emotions and plan the future steps.

From a logistics perspective, manage the exit process smoothly by supporting paperwork, ensuring timely benefits transfer, and efficiently managing the entire exit process.

The Post layoff phase matters. Continuing to support career counselling, outplacement assistance, and maintaining open communication channels, along with conducting regular reviews and feedback on the entire journey, would help an organisation identify gaps and areas for improvement.

Manjari Srivastava, Associate Dean – Academic Programs at K J Somaiya Institute of Management

This article has been published with permission from K J Somaiya Institute of Management. https://kjsim.somaiya.edu/en/