Published on: July 22, 2026 at 9:00 am
By Marc Hogan
A recent report by outplacement firm Challenger, Gray & Christmas found that layoffs by U.S. employers in 2025 were at their highest level since 2020. Times of recession, stagflation, volatility, uncertainty, or economic headwinds can put the values that business leaders profess to hold into conflict when they decide to make job cuts.
Academy of Management Scholar Sean Martin of the University of Virginia said that one of the most commonly espoused values among Fortune 500 business executives was, in various forms, “We care about people.” However, when organizations conduct layoffs, even if the move may be what’s best for profitability, the people who get laid off are inevitably harmed.
This disconnect creates a “huge cultural problem,” Martin said. To address this quandary, Martin recommends that business leaders exercise empathy and look at their organization’s culture to formulate the right message for the employees who remain.
“Going back to the culture for cues about how to message this is going to be key to people in leadership positions,” he explained.
For instance, if caring about employees is part of the culture, then leaders might say that the layoffs were necessary for the long-term collective good of the company, while noting that it’s their job to make the hard decisions that are the best for the organization, Martin observed.
Further, if ethics and integrity are at the top of the organization’s list of values, then the leaders need to offer transparency and take ownership of their decisions, Martin added. That could mean saying that while challenging macroeconomic conditions are partly to blame, the leaders also “made a mistake” by hiring too many people when business was good, he noted.
“People feel more psychological safety when they believe their leaders feel okay admitting their fallibility,” Martin said.
At the same time, leaders may want to be wary about couching layoffs in purely financial terms.
“It might not only be a financial reason,” he explained. “We run a huge risk to our cultures if we make people feel like they are essentially a number and something to be monetized instead of a member of this team that we’re trying to build.”
With transparency and messaging that are grounded in a culture of caring about employees, ethics, and integrity, leaders can mitigate the perception of hypocrisy, greed, or callousness.
“Cutting jobs will always hurt, but you can try to create less of a gap between the organization you say you are and the decisions that people see you making,” Martin said. “That gap is toxic.”
