Making Empathy Central in a Layoff: Why it Matters for Small and Medium-Sized Businesses

Layoffs are difficult, regardless of whether you have 100 employees or 100,000. But for small and medium-sized businesses where leaders are likely to personally know their employees, the stakes can feel even higher. When layoffs happen, it’s not just about managing costs or reshaping your workforce — it’s about handling the process in a way that protects your business's reputation, both inside and outside your organization.

For smaller companies, the connection with your team is personal. You might know your employees by name, understand their challenges, and have built strong local ties that extend beyond your business. This proximity means that empathy isn't just a nice-to-have when making tough decisions — it's essential.

One of the key risks during layoffs, especially for SMBs, is the impact on your remaining employees. When workers leave, your remaining staff are likely to stay connected with their former colleagues, hearing firsthand how they were treated during their departure. If that departure is handled poorly, these stories spread quickly, especially on social media.

Negative experiences shared online can quickly tarnish your employer brand, making it harder to retain the team you have and attract new talent. The same workers you need to keep your business running may begin questioning whether they want to stay, and future candidates may not consider joining your company.

Small businesses are part of a local network where reputation matters, and how you treat employees during challenging times can define how you're perceived not just as a business, but as a member of the community.

In the past, only large, well-resourced employers had access to technology and platforms for supporting employees during a layoff. But there are now practical, cost-effective tools that can help small businesses offer meaningful support during layoffs. For instance, advances in generative AI and other technologies allow businesses to guide employees through the job search process, helping them identify transferable skills and prepare for the next steps in their careers.

This level of support, which used to be reserved for larger organizations, is now available to businesses of all sizes. When employees know they’re being set up for success after they leave, they are more likely to leave on good terms, and your current team will take note of how you handle these transitions.

Avoiding the reputation risks associated with a layoff begins with empathy. By treating employees with dignity and respect during layoffs, you not only safeguard your business’s reputation but also support the long-term health of your team and your local standing.

Empathy isn’t just about being kind — it’s about thinking long-term. It’s important for small businesses to understand that even laid-off employees are still a part of their community — and treating them well ensures that they leave with a positive impression.

While negative stories about poorly handled layoffs travel fast, so do positive ones. If your laid-off employees leave feeling respected and supported, they'll share those experiences too. These stories, while not as headline-grabbing, will reach future talent and help you recruit effectively down the road.

In a small business, your reputation is everything. Making empathy central to your employer brand is a competitive advantage that can strengthen your business’s long-term success. By handling layoffs with care, you not only protect your current team and reputation but also demonstrate to your community and future employees that you’re a business that truly values its people.

Download our 2024 Outplacement and Career Mobility Trends Report to learn more about how layoffs are affecting small and medium-sized businesses.