Mass layoffs are terrible. For the people who get laid off, obviously. But also for those who stay. When companies wage what should be a respectful breakup with the employee factions they no longer need, they expose the entire organization to what psychologists call an “honesty deficit.”

Employees pay attention to how you treat your people. When they feel abused, disrespected, or mistreated, they lose trust in their employer and will take that erosion of trust with them whenever they leave, even if they voluntarily leave. Who wants to work for a company that treats people poorly when layoffs happen? Who wants to work for a company that treats its layoffs dishonestly?
Employees noticed how you treated their colleagues.

Large-scale workforce reductions began in late 2022 and continued into 2024 and beyond. Across sectors and companies of varying sizes, layoffs were notable for both their scope and the tenor of the accompanying organizational communications.

In many organizations that had made years of happy talk about how “employees are our most valuable asset,” workforce reductions were delivered with communications that were, to put it kindly, dishonest. Not dishonest in the sense of making knowingly false claims, though some of those occurred. Dishonest in the sense of creating a patently inaccurate picture of what was happening and why.

Organizations deceived employees about what was happening.
At the level of stated causes, layoffs attributed to macroeconomic factors were, in many reported cases, actually the corrective result of having overhired in prior years. Convenient external cause? Sure. But why would an organization describe internal hiring decisions as if they were caused by external forces? To avoid taking responsibility for those decisions. To present what was clearly an organizational choice as though it were a necessity. Some of these claims were technically true; those organizations truly did face a challenging macroeconomic environment. Most of these claims were not untrue; they were misleading.

Organizations deceived employees about the scope.
Layoffs described as affecting only a small percentage of the company, in practice, eliminated entire teams, functions, and levels of the organization. Again, if you look at the global workforce, that description may be technically accurate. But why would an organization that just fired its entire recruiting team, its entire internal communications team, and many people from its middle management layer describe that action as only impacting three percent of its employees? Because framing the layoffs in terms of percentages downplays the true scale of the action and makes it easier to claim that nothing “structural” happened. Employees saw through this.

Organizations deceived employees about the process.
Promises of generous treatment, competitive severance, and support were made at the same time as the structural/process inadequacies that prevented organizations from following through on those promises. Continuing benefits were accidentally interrupted. Severance packages included non-disparagement clauses that employees were given insufficient time to consider. Reference policies changed after employees were laid off. Many of these problems were caused by the speed and scale of the layoffs themselves. They did not reflect intentional bad faith. To the employees affected by them, they reeked of bad faith. Because organizational communication had set expectations that organizational action could not meet.
Employees noticed how you treated their friends and family.

Your employees are not the only ones who notice your layoffs. Everyone who has to stay does so. And research shows that layoffs have a bigger impact on the employees who remain than you might think. In fact, how those layoffs are perceived can do more long-term damage to your organization than the layoffs themselves.

Organizations accrue trust or goodwill with employees over years of honest communication. They can lose it in a matter of weeks by treating their employees poorly during a layoff. What is more, employees understand this. They know that layoffs are hard on everyone. They know that you have to do them sometimes. But they also know that how you do them matters. If you get laid off in an organization that you perceive to be dishonest, you learn something about how that organization views honesty. You learn something about whether the organization’s prior communications about its values actually meant anything. You adjust your trust in your employer accordingly.

Employees adjust their trust in their employer when layoffs aren’t handled with honesty.
The good news is that being honest about layoffs does not require you to share confidential information, make promises you can not keep, or put your organization at risk of litigation. Being honest means that the information you do share accurately reflects the situation. It means that you frame your communications in a way that helps, rather than obscures, your employees’ understanding of what’s going on. And it means that you only make commitments your operations team can actually deliver on.

At least one group of employees noticed your layoffs. They noticed how you treated their co-workers. They will remember.
Did you lie to your employees about your layoffs? Whether it’s during layoffs or otherwise, honesty is the best policy.
Excerpted from Noog’s Newsletter: Lessons in Leadership, Communication, and Talent Development (#EffectiveCollectiveIntelligence), the nature of the decisions being made, and that the commitments made be ones the organization has the operational capacity to honor. These are not demanding standards. They are the minimum conditions for organizational communication that employees can trust.

The organizations that met these standards during the reduction cycle of 2022 through 2025 are, in the current period, in a structurally advantaged position relative to those that did not. Their surviving employees have evidence that the organization behaves honestly when honesty is costly. That evidence is worth more, in terms of organizational commitment and trust, than any amount of culture investment made during periods when honesty carries no cost. The organizations that managed their communications carefully and dishonestly are now investing in re-engagement initiatives, culture-rebuilding programs, and employer-brand restoration campaigns, whose effectiveness is limited because the employees they target have accurate information about how the organization behaves when its stated values are tested. The cost of the dishonesty is not the communication itself. It is the organizational relationship that the communication damaged, and the investment is now required to partially restore it.

When an employee raises a concern that proves, in retrospect, to have been accurate, organizations reliably engage in a particular retrospective reconstruction. The employee, they will say, was difficult. Prone to complaints. Not a team player. Had performance issues that were being managed. The accuracy of the concern is separated from the character of the person who raised it, and the character of the person who raised it is reconstructed to explain why the concern was not taken seriously at the time.

This is not dishonesty in the ordinary sense. It is a self-protective cognitive operation that organizations perform on their own histories with considerable efficiency and, in most cases, without conscious intent. The people engaged in the reconstruction genuinely believe it. That is precisely what makes it worth examining. The whistleblower who was right becomes, in organizational memory, the difficult employee who happened to be right about one thing. The signal is eventually acknowledged; the structural failure that prevented it from being heard is quietly erased from the organizational narrative.

The mechanism has been documented across organizational contexts with remarkable consistency. In healthcare, employees who raised patient safety concerns before adverse events were subsequently described by their organizations as having raised concerns in an inappropriate manner, through the wrong channels, with an adversarial rather than constructive intent. In financial services, employees who identified risk exposures before those exposures materialized were described as having lacked the full picture, as having been motivated by personal grievance, as having overstated the significance of what they observed. In manufacturing, workers who reported safety violations before accidents were characterized as chronic complainers whose concerns had been reviewed and found unwarranted. The pattern is consistent enough to be considered a reliable organizational response rather than an occasional failure of individual integrity.

The label matters because it does not function only retrospectively. It functions prospectively, as a deterrent to future signal-raising. Employees who observe how concerns are received, how the people who raise them are subsequently treated, and how the organization reconstructs its response to those concerns when they prove accurate, draw rational conclusions about the personal cost of raising concerns in the future. The label does not have to be applied to them personally. It has to be plausibly applicable. That is sufficient to suppress diagnostic information at precisely the organizational levels where it is most needed.

The research on organizational silence is extensive and consistent. Employees across industries and organizational types report that they routinely observe problems, errors, and risks that they do not report through formal channels. The primary reason cited is not ignorance of reporting mechanisms. It is the rational assessment that reporting carries personal costs that outweigh the probable organizational benefit. That assessment is typically accurate. Organizations that have not built structural protections for concern-raisers, and structural consequences for those who retaliate against them, have, whether intentionally or not, built systems that optimize for the suppression of diagnostic information.

The legal framework reflects this reality, though imperfectly. California Labor Code Section 1102.5, among the broadest whistleblower protection statutes in the country, prohibits retaliation against employees who disclose information they reasonably believe evidences a violation of law, regardless of whether the disclosure proves accurate or is made through internal or external channels. The federal framework, while less comprehensive, provides analogous protections in specific sectors. These protections exist because the legislature recognized what organizational research had already established: without structural protection, the rational individual calculus consistently favors silence over disclosure.

Organizations that have genuinely improved their capacity to receive diagnostic signals have done so not by encouraging employees to speak up, which is a cultural intervention with a consistently poor track record, but by building structural protections for the people who do, structural consequences for the people who retaliate, and structural mechanisms that separate the evaluation of the signal from the evaluation of the person who delivered it. Anonymous reporting systems with genuine independence, non-retaliation policies with genuine enforcement, and concern-tracking mechanisms that create accountability for organizational response — these are the interventions that the research supports.

Culture follows structure. It does not precede it. Organizations that invest in cultural interventions, values statements, speak-up campaigns, and open-door policies, while leaving intact the structural features that make speaking up personally costly, will continue to receive the organizational silence that those structures produce. The label will continue to be available, and rational employees will continue to behave as if it might be applied to them. The structural question is the only question that matters.