A strong employer brand attracts top talent and turns employees into brand advocates. But during a layoff, the brand enters crisis mode. The way a company handles a reduction in force (RIF) can either strengthen or seriously damage its reputation, with lasting effects on recruitment, retention, and morale.

When companies make the difficult decision to reduce their workforce, reputation management frequently takes a backseat to pressing financial and operational concerns. 

It shouldn’t.

The impact of layoffs on an employer’s brand can shape everything from future hiring to internal morale, customer perception, and even long-term business resilience. 

Candidates are watching. Employees are listening. Former team members are talking. What they see and hear can either validate your company’s values or contradict them.

With a thoughtful, people-first approach, you can mitigate the damage and maintain trust in challenging circumstances.

Key takeaways:

• Layoffs inevitably impact employer brand, but you can control the narrative.
• Thoughtful communication and compassionate execution demonstrate your company is committed to its people and help preserve trust.
• Outplacement support for departing employees is a proactive step toward protecting your company’s reputation and maintaining goodwill.
• How you lead during challenging times leaves a more lasting impression on your employer brand than how you operate in periods of stability or success.

A weak offboarding strategy leaves lasting damage

When companies handle employee departures without a clear offboarding strategy, the consequences often extend far beyond the individual exit.

Mishandled offboarding can erode morale, productivity, and trust. Remaining employees may feel vulnerable or disengaged, and external stakeholders may interpret chaotic transitions as signs of deeper instability. In fact, 71% of layoff survivors report decreased motivation at work, evidence that the ripple effects are real and measurable.  

The stakes are also reputational. According to the peak-end rule, people tend to remember experiences most vividly at their highest emotional point and their conclusion. That means a poor exit experience — regardless of what came before — can sour an employee’s entire perception of your organization. From Glassdoor reviews to rehire potential and brand equity, the final impression matters.

Understanding how layoffs affect employer brand

Workforce reductions are typically driven by financial or strategic imperatives, but their impact is deeply personal. For affected employees, a job loss can be life-altering and emotionally taxing.

Layoffs also take an emotional toll on remaining employees, who bear the operational weight of team changes. Compassion for departing colleagues often gives way to distrust in leadership and anxiety about their own roles. Left unaddressed, this emotional undercurrent can erode morale, productivity, and retention.

Externally, layoffs can quickly shape your employer brand narrative, especially if handled poorly. Reviews from departing employees on platforms like Glassdoor and LinkedIn create a lasting, searchable record of their experiences, which are often perceived as more authentic than corporate communications.

Prospective candidates, especially top talent with options, will notice. Signals of cultural instability or misaligned leadership can deter them from engaging with your organization. Significant workforce reductions may also raise red flags for customers and investors, particularly when the process appears opaque or mismanaged.

With your company’s reputation, culture, and future talent pipeline at stake, every decision made during workforce transitions matters. Clear communication and empathetic leadership are essential to maintaining credibility and minimizing long-term impact.

Common layoff missteps that damage employer reputation

Missteps in communication, support, and leadership visibility during an RIF often leave the most lasting impression. Avoiding the following pitfalls is the first step toward preserving trust and credibility during a challenging time.

• Lack of accountability from leadership. Senior leaders are ultimately responsible for communicating and owning layoff decisions, even when those decisions are made at the board or parent company level. When leadership fails to take responsibility or delivers the news in a cold, procedural way, it creates space for resentment and disengagement among both impacted and remaining employees.
• Minimal support for impacted employees. Departing employees often face uncertainty around income, career prospects, and identity. When organizations fail to offer severance, outplacement services, or even a respectful offboarding process, it sends a message that people are expendable.
• No messaging to remaining staff. RIFs affect everyone, not just those whose roles are eliminated. Yet many organizations fail to address the emotional toll on the team that remains. Not acknowledging their concerns, questions, and sense of instability fosters a culture of fear, detachment, and declining morale. Over time, this can lead to a decline in engagement, productivity, and retention.
• Underestimating the power of negative reviews. Poor communication or a lack of empathy during layoffs inevitably leads to a rise in negative online reviews. These reviews are highly visible, searchable, and trusted by job seekers. Failing to respond or acknowledge public feedback only reinforces a perception of leadership avoidance and lack of accountability.

3 strategies for navigating layoffs with care and protecting your employer brand

How you communicate and act during workforce reductions sends a message to current and future stakeholders about your organization’s values. A thoughtful approach can preserve trust and strengthen your employer brand, while missteps can have lasting consequences.

The following strategies will help you lead with care and protect your employer brand through the process.

1. Lead with transparency and compassion

The delivery of difficult news shapes how both departing and remaining employees perceive leadership, and by extension your employer brand. Be clear about the business challenges that led to the decision and avoid sugarcoating it because employees will register the inauthenticity.

Your leaders’ tone should be direct, but compassionate. It’s important to acknowledge the emotional impact, affirm that the decision was not made lightly, and recognize the contributions of those affected.

These moments leave a lasting impression on your culture and employer brand. Handled with care, they can preserve trust, and even strengthen your organization’s long-term credibility.

2. Create a dignified offboarding experience

Layoffs are among the most emotionally charged moments in the employee lifecycle, so how you handle offboarding leaves a lasting mark on your company reputation. Departing employees should have clear answers to questions like what their work expectations are during their final days with the company, what will be communicated to their clients, when benefits end, and whether they’ll receive payouts for unused PTO.

Beyond logistics, offer tangible support such as an Employee Assistance Program (EAP), a fair severance package, and outplacement services. Outplacement provides practical help with résumé writing, interview preparation, and job placement support, giving employees tools to land their next role faster. It’s a clear signal that your organization is invested in their future, even after separation. The goodwill it generates can protect your employer brand and reduce the emotional fallout of the layoff process.

3. Establish open communication channels

Supporting departing employees should be your most immediate concern. But once the dust settles, remaining employees will naturally have questions and concerns, and silence can breed anxiety. By proactively making space for dialogue, you create room for reassurance and for trust to rebuild. For example, you might encourage managers to hold team check-ins and offer office hours or other opportunities for employees to ask questions and share feedback.

At the same time, senior leaders should acknowledge common concerns, such as fears of additional layoffs, changes in workload or team structure, and the future direction of the company. Addressing these topics directly, even when all the answers aren’t yet clear, helps reinforce transparency and steadies your culture during a period of disruption.

Outplacement protects employer reputation during offboarding

Layoffs may be a business necessity, but how you handle them is a choice. Companies that approach offboarding with empathy, structure, and support preserve relationships with departing employees while sending a powerful message to those who remain.

Outplacement isn’t a courtesy. It’s a tangible investment in your people and your employer brand, demonstrating that your commitment to employees doesn’t end when their role does. By helping individuals navigate their next steps with confidence, you reinforce trust with remaining employees, protect your reputation, and position your organization as one that leads with integrity.

Looking for a clear framework to get it right? Download our Offboarding Done Right Report for actionable steps, templates, and expert insights that help you lead with compassion and credibility.