How to Handle Layoffs the Right Way: Lessons From a Former CEO
Layoffs are difficult but often necessary. As a former CEO who’s had to lead multiple workforce reductions, I understand the pressure leaders face during these moments. With layoffs continuing across the tech industry, even in fast-growing sectors like AI, it’s crucial for leaders to be prepared—and to act with care and clarity.
Why Layoffs Happen
Layoffs can result from many factors—some internal, others driven by the market. You may have to reduce headcount due to changes in strategy, a shift in market demand, or the sudden loss of a major client. Sometimes, it’s because an organization has become bloated and needs to refocus.
At a broader level, many investors are pulling back. Venture capital firms are raising less, and funding rounds are slower and smaller than expected. This uncertainty means companies must be ready for hard decisions if capital dries up.
Even with the U.S. economy performing better than expected, there’s still risk ahead, especially as we move into late 2025 and beyond. Having a layoff plan—even if you never need it—is smart business strategy.
How to Conduct Layoffs with Compassion
When layoffs become unavoidable, your top priority must be treating people with respect and empathy.
Avoid vague or overly legalistic explanations. Employees deserve to know why the decision is being made and why now. Clear, direct communication builds trust—not just with those leaving, but also with those staying.
Offer severance if possible, and provide job placement support. These steps can boost morale for your remaining team as much as retention bonuses.
Also, make sure your cuts are strategic. Avoid the mistake of evenly reducing teams without considering performance and future needs. A poorly planned layoff often leads to a second round—and more disruption.
Advertisement
Multiplier | The World's Leading Global Human Platform
Multiplier is a leading global employment platform that manages employment, payroll & compliance for International Teams. Multiplier makes it easy to hire, onboard, manage, and pay employees and contractors around the world. We offer end-to-end global employee management – All in one place!
What Leadership Needs to Do
Leading a layoff is emotionally draining, but it’s when your team needs you most. Be steady, empathetic, and focused. Help the team see the path forward.
Use your network. Talk to mentors and leaders who’ve gone through similar situations. Getting outside perspective helps you stay grounded and make better decisions.
Downsizing can also bring opportunity. A well-executed layoff can make space for new talent, help reassign top performers to higher-priority roles, and renew focus across the company.
The right balance of empathy and optimism will help rebuild momentum.
Avoid These Common Mistakes
Here are a few hard-earned lessons from my own experience with layoffs:
- Plan early: Have both optimistic projections and worst-case plans ready. Even a basic outline helps when decisions need to be made quickly.
- Keep investors informed: Don’t surprise them. Share your planning and get their input. Their support is critical.
- Be authentic in your messaging: Speak in your own voice. Avoid statements that sound like they came from a legal team. Your team needs honesty and confidence.
- Time it right: Notify impacted employees mid-week, typically on a Wednesday. This gives time for follow-up conversations and support before the weekend. Hold a town hall Friday to regroup with the remaining team and set a new tone.
Done Right, Layoffs Can Refocus Your Company
Layoffs will never be easy. But with the right preparation, clear communication, and thoughtful leadership, they can strengthen an organization.
By focusing on what matters—clarity, strategy, and compassion—you can help your team navigate tough times and emerge stronger.