Economic uncertainty places immense pressure on organisations, forcing difficult decisions like redundancies and budget cuts. While necessary for survival, these actions can send shockwaves through the workforce, impacting morale, productivity, and ultimately, the bottom line.

Leaders are left navigating a challenging landscape, needing to balance fiscal responsibility with the wellbeing of their remaining employees. This means proactively addressing anxieties, fostering a sense of stability, and maintaining engagement within a climate of uncertainty.

Failing to do so risks a domino effect of declining performance, disengagement, and further attrition, hindering the organisation's ability to weather the storm and emerge stronger.

The year 2024 has seen continued redundancies across various sectors, with the tech industry particularly affected. Crunchbase News reported over 92,000 tech worker redundancies in the United States alone, while Layoffs.fyi tracked even higher numbers globally.

Even in Southeast Asia, Sea Limited (Singapore) recently made 7,000 employees redundant, while GoTo (Indonesia) laid off 1,300 more. Startups in the region have also resorted to downsizing. This was largely attributed to over-hiring during the pandemic and a subsequent economic downturn.

This trend, while slower than 2023's surge, reflects ongoing economic uncertainty and adjustments after pandemic-era over-hiring. Broader redundancy data from the US Bureau of Labor Statistics showed a slight uptick in overall redundancies and discharges, indicating that this is not just a tech sector issue.

Also Read: Are redundancies really necessary when adopting AI?

The real impact of redundancies

Redundancies inflict a heavy blow on employees, extending far beyond financial hardship. The sudden loss of income triggers immediate anxieties about meeting basic needs and securing future stability. This financial strain often leads to stress-related health issues, impacting both physical and mental well-being.

The abrupt severance from a job can leave individuals feeling devalued and questioning their skills, leading to a loss of confidence and motivation. This can be exacerbated by the stigma sometimes associated with unemployment, further isolating individuals and hindering their job search efforts.

The impact of redundancies extends even to those who were not affected. The remaining workforce, often referred to as the "survivors," grapple with a unique set of challenges that can significantly affect their morale, productivity, and engagement. With fewer colleagues, remaining employees often absorb increased workloads and responsibilities, leading to longer hours and heightened stress.

Witnessing redundancies can also breed fear and insecurity, eroding trust in the organisation and fostering a sense of guilt or self-doubt. This can manifest as decreased morale, disengagement, and a lack of motivation.

Redundancies also disrupt established teams and workflows, forcing survivors to adapt to new roles and responsibilities, potentially creating confusion and resistance to change.

The consequences of these challenges are significant and far-reaching. Overworked and stressed employees are less productive, absenteeism and presenteeism may increase, and the organisation's reputation can suffer, making it difficult to attract and retain talent.

How to keep morale up amid redundancies and budget cuts

Redundancies and budget cuts create a ripple effect of uncertainty and anxiety in the workplace. Maintaining morale during these challenging times requires proactive and empathetic leadership. Here are 7 steps to help keep morale up amidst redundancies and budget cuts:

Practise transparent communication

Openly and honestly communicate the reasons for redundancies and budget cuts. Explain the situation, the decision-making process, and the future outlook. Be upfront about challenges while also emphasising the company's strengths and strategies for navigating the difficulties.

Acknowledge employee concerns

Create a safe space for employees to express their concerns and anxieties. Hold town hall meetings, conduct surveys, or offer one-on-one conversations. Actively listen to their fears and questions, and respond with empathy and understanding.

Focus on the remaining team

Recognise the contributions of the remaining employees and emphasise their value to the company. Express gratitude for their hard work and dedication, especially during a challenging period. Reinforce their importance in achieving the company's goals.

Provide support to affected employees

Offer outplacement services, severance packages, and career counselling to employees who have been made redundant. This demonstrates compassion and responsibility, and it can help alleviate some of the stress associated with job loss.

Invest in employee development

Show commitment to the remaining workforce by providing opportunities for professional development and growth. Offer training programmes, mentorship opportunities, and skill-building workshops. This signals that the company values its employees and is invested in their future.

Foster a positive work environment

Encourage teamwork, collaboration, and open communication. Organise team-building activities, celebrate successes, and recognise individual achievements. Create a culture of support and appreciation.

Hold regular dialogue with team members

Continue to communicate regularly with employees throughout the process. Provide updates on the company's situation, address any new concerns, and reiterate the company's commitment to its employees. Consistent communication builds trust and fosters a sense of stability.

Also Read: Rocked by redundancies? 5 ways to keep the ship steady

Building resilience and rekindling growth

Navigating economic uncertainty is a formidable challenge for any organisation. While redundancies and budget cuts may seem like inevitable realities, their impact on the remaining workforce can be profound and far-reaching.

However, these turbulent times also present an opportunity for leaders to demonstrate their commitment to their employees and foster a more resilient and engaged workforce.

By embracing transparent communication, actively listening to employee concerns, and investing in their development, organisations can emerge from the storm stronger and more unified.

Fostering a positive and supportive work environment is not merely a matter of surviving the downturn; it's about positioning the organisation for future success. When employees feel valued, supported, and empowered, they are more likely to remain engaged, productive, and committed to the organisation's goals.

This, in turn, creates a virtuous cycle of resilience, innovation, and growth, enabling the organisation to not only weather the storm but to thrive in the face of adversity. As the economic landscape continues to evolve, prioritising employee wellbeing will be paramount.