2024 has been a challenging year for many, and especially for the tech industry. According to the Harvard Business Review, more than 100,000 people were laid off by October, with the number projected to reach 150,000 by the end of the year. And this is just tech.

I’ve witnessed the impact of these layoffs on former colleagues, friends, and coaching clients. It’s tough on so many levels – financial uncertainty, fears about the future, and, perhaps most importantly, the erosion of trust. One common sentiment I keep hearing is that many people feel the communication from their companies hasn’t been transparent and that the decisions made were unfair.

This raises a critical question: Can a business offer justice and fairness during such dramatic changes?

Organizational Justice refers to how employees perceive fairness in the workplace, and it can significantly influence their attitudes, behavior, and overall well-being. There are four key dimensions of organizational justice that businesses must navigate, particularly in times of major disruption like layoffs:

Distributive Justice: This is about the fairness of outcomes – whether employees believe they’re receiving their fair share, whether it’s in pay, promotions, or layoffs. In a layoff situation, this would mean ensuring that the distribution of job cuts feels just and equitable.

Procedural Justice: This relates to the fairness of the processes behind decision-making. Employees want to know that the methods for determining layoffs were transparent, consistent, and unbiased. Was there a clear process for who was let go and why?

Interactional Justice: This dimension focuses on how employees are treated by others in the organization. During layoffs, employees want to feel respected and treated with dignity. It’s not just about the decisions made, but also about how these decisions are communicated.

Informational Justice: This involves the transparency of the information shared with employees. In times of change, especially during layoffs, it’s crucial that communication is timely, clear, and honest. Without this, employees are left in the dark and trust erodes quickly.

So, how can a company navigate these dimensions during a layoff to create a sense of fairness and justice? It would require a fair and clear reduction of jobs, transparent decision-making, treating everyone with respect, and providing timely information. But as leaders we know, this is easier said than done.

The Equal Division of Resources in Times of Change

When we think about how resources – whether they’re jobs, pay, or benefits – are divided in an organization, we can use several principles to guide the process:

Equality: Resources are distributed equally among everyone, regardless of need, contribution, or merit. This can seem fair on the surface but may feel unjust to those who have contributed more.

Need: This approach allocates resources based on individual needs. For layoffs, this could mean protecting those who are in more vulnerable financial situations or who have other extenuating circumstances.

Equity: Resources are distributed according to contributions, effort, and merit. In the context of layoffs, this could mean letting go of employees whose performance or contributions have been less impactful.

Effort: Those who put in the most effort should receive the most. This could be seen as fair if employees who have worked the hardest or longest are retained, but could also raise questions if effort hasn’t led to results.

Contribution: Similar to equity, but more focused on the actual value added. In layoffs, this would be about evaluating which employees are most essential to the organization’s future.

Utilitarianism: The aim here is to maximize overall happiness. In the case of layoffs, this might mean making the decision that benefits the organization as a whole, even if it leads to some individuals feeling unfairly treated.

These principles offer different ways to think about fairness in layoffs, and it’s clear that the approach taken by an organization might not align with the individual’s sense of fairness.

Why Does This Matter?

Organizational justice isn’t just about making layoffs fairer – it’s also about the impact on those who remain. The “survivors” of a layoff are also watching how the process unfolds. They will take their cues from the transparency, respect, and communication displayed during the layoff, which can impact their motivation, trust, and engagement moving forward.

What Can Leaders Do?

While it may be impossible to make everyone feel that a major layoff is fair, there are a few fundamental principles that every leader can stick to:

• Be clear about the criteria for making decisions.
• Be as transparent as possible in your communication.
• Ensure everyone receives the same information at the same time, to avoid rumors and mistrust.

What’s Your View?

Can an organization offer justice and fairness during times of change? Share your thoughts – this is a conversation worth having, especially as more organizations face difficult decisions in the months ahead.

Learn & Lead the Way,
Frida