In the world of layoffs, restructuring, and economic uncertainty, the question of employee well-being has never been more urgent. As organisations grapple with cost-cutting measures, downsizing, and organisational shifts, the often-overlooked collateral damage is the well-being of the workforce. But is employee well-being getting lost in the shuffle? Or are organisations rising to the challenge of supporting their teams during tough times?

In the most recent People Matters Big Questions session, Ariz Rizvi, Head of Health Risk Management at Aon, and Sonali Sardana, Associate Director of Wellbeing at Concentrix, took center stage to discuss the shifting tides of well-being in the era of layoffs and restructuring. What transpired was an eye-opening conversation that not only highlighted the challenges but also the opportunities that companies can seize to protect and support their people through uncertain times.

The shifting landscape of employee well-being

As Ariz Rizvi aptly put it, “The current economic climate is challenging, but it’s also revealing a crucial shift in how organisations are thinking about well-being.” This was a sentiment echoed by both speakers throughout the conversation. Ariz went on to note that while stress and anxiety are part of the landscape, it’s crucial to focus on how companies are responding. “Organisations are now more informed and more invested in well-being initiatives than ever before,” he said. “In fact, I would argue that we are seeing more investment in well-being now than during previous economic downturns.”

This is a positive shift. The pandemic may have been a wake-up call, but it seems that well-being is now moving from the periphery to the center stage of organisational priorities. What’s becoming clear is that organisations are no longer treating well-being as a luxury, but as an essential component of long-term success. But as Ariz pointed out, there is still a long way to go. The next step, he emphasised, is to move from a reactive to a more proactive approach. “We need to think beyond just preventing issues,” he urged. “We need a proactive and protective well-being strategy that encompasses emotional, physical, and financial well-being.”

Beyond layoffs: Rethinking workforce management

The conversation then turned to the challenging reality of layoffs. A traditional response to financial uncertainty, layoffs are often seen as a necessary evil. But is that the only solution? Can companies explore other options that reduce the emotional and psychological toll on employees?

Ariz and Sonali both firmly agreed that layoffs should not be the default answer. The  Associate Director of Wellbeing at Concentrix offered a more holistic view: “There are alternatives to layoffs. Companies should look at adjusting roles, offering voluntary sabbaticals, or even reducing work hours temporarily. There’s also the potential of re-skilling and shifting the company culture to create long-term value.” By focusing on retaining talent and restructuring roles, organisations can minimise the emotional fallout that often follows mass layoffs.

Sonali also pointed out that when layoffs are inevitable, there’s a strong need to preserve the company culture. “It’s not just about the financial side of things,” she noted. “It’s about the emotional and cultural impact. Leadership plays a crucial role in preserving core values, and that’s done through transparency, sensitivity, and strong communication.”

The silent toll: Managing the psychological impact

While the financial and logistical aspects of layoffs can often be addressed through severance packages and career transition support, what about the psychological toll? This was one of the key points raised during the session. The emotional well-being of employees—those leaving the company as well as those staying—often gets neglected in the rush to balance the books.

“There’s a huge psychological component that organisations need to address,”  the Associate Director of Wellbeing at Concentrix emphasised. “The employees who remain are often the ones who suffer the most. They are left with guilt, anxiety, and fear about their own job security. This can cause a breakdown in trust between employees and leadership.”

The Head - Health Risk Management, Aon, agreed, stressing the importance of providing a psychological safety net. “It’s not just about the person leaving,” he said. “It’s about the remaining team members too. Offering counseling services, mental health resources, and ensuring that leadership remains open and transparent is critical.”

Sonali added, “What’s often overlooked is that layoffs don’t just impact the people who are directly affected; they ripple throughout the organisation. Those who remain often feel a sense of betrayal or fear. It’s crucial to address these emotions and provide reassurance.”

Building trust and retaining top talent

As layoffs shake the core of organisations, a pressing question looms large: how can companies rebuild trust and retain their best talent? After all, the employees who remain are the ones who will carry the company forward. The trust factor is key to ensuring they don’t jump ship as soon as opportunities arise elsewhere.

Sonali, ever the advocate for transparent leadership, shared her perspective: “Authenticity is the foundation of trust. Leaders need to be vulnerable and honest with their teams. Acknowledge the difficulty of the situation, but also share the vision for moving forward.” When employees feel that their leadership is genuine and transparent, they are far more likely to stay engaged, even in times of uncertainty.

Ariz supported this view, adding that leadership communication needs to focus on long-term goals. “Layoffs are temporary. The long-term strategy, however, is what will define the company’s success. If leadership can effectively communicate the company’s long-term vision, it can rally the remaining employees around a sense of purpose and direction.”

Both speakers also discussed the importance of involving employees in shaping the company’s future. “Employees who feel heard are more likely to stay,” Sonali said. “It’s about creating a partnership with employees, not just top-down decision-making. They need to feel that they’re part of the solution, not just passive observers.”

It’s clear that well-being extends far beyond just mental health. The economic uncertainty caused by layoffs and restructuring often creates financial anxiety as well. Ariz pointed out that financial literacy is an essential component of well-being that is often ignored. “When employees are uncertain about their financial future, their emotional well-being is directly affected. Companies should offer financial planning resources, retirement savings options, and even life insurance,” he suggested. “Supporting employees financially as well as emotionally helps them navigate transitions more effectively.”

Sonali agreed, adding that financial well-being is a crucial pillar of a comprehensive employee support strategy. “Employees need to feel secure, and financial education can go a long way in helping them plan for uncertainty.”

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The role of leadership: A call to action

To sum up, leadership plays a critical role in navigating the delicate balance between maintaining business objectives and caring for the emotional and psychological well-being of employees. Ariz and Sonali both agreed that companies need to rethink their approach to layoffs, communication, and employee support. Authentic leadership, transparent communication, and a focus on both financial and emotional well-being are crucial to navigating these tough times.

“If leaders show empathy, communicate openly, and involve employees in the process, it will make all the difference,” Sonali concluded.

In the end, layoffs may be an inevitable part of business life, but how organizations handle them is what will define their future success. By investing in employee well-being—emotionally, financially, and psychologically—companies can not only navigate these difficult times but emerge stronger, more resilient, and more connected to their teams than ever before.

To learn more from leaders about some of the burning questions in today’s world of work, stay tuned to People Matters' Big Question series on LinkedIn.