Redundancies Are Everywhere. How Do You Do Them Well and Rebuild Trust

Redundancies Are Everywhere Right Now

Redundancies are rising, and AI is increasingly being cited as part of the reason. But for leaders, the biggest risk isn't necessarily the redundancy itself. It's what happens in the months afterwards.

The way you handle redundancies determines whether the people who remain continue to trust you, perform for you and ultimately choose to stay. Channel 4 is planning to cut 340 jobs by the end of 2026, reducing its workforce by more than a quarter. The BBC has committed to reducing its workforce by 10%, around 2,000 roles. In the US, 101,743 job cuts were attributed to AI in the first half of 2026, almost double the total for the whole of 2025.

Here in the UK, the CIPD found that one in six employers expects AI to reduce their workforce over the next year, while another recent survey suggests around a third of employers are likely to make redundancies by the beginning of 2027. At The Work Psychologists, we're seeing this up close. Right now, around half of the CEOs we coach are making people redundant. Some are cutting entire parts of their businesses. None of them are doing it lightly. Most of them are losing sleep over it.

So there are three things leaders need to think about: how to handle redundancy well, how to rebuild trust afterwards, and how to keep the people who stay performing.

Because here's what most leaders miss.

The redundancy isn't the risky part. The months after are.

What Does It Cost When You Get Redundancy Wrong?

Most redundancy plans are built on a spreadsheet. Fewer salaries, lower costs, job done.

But the spreadsheet leaves out the most expensive line of all: what happens to the people who remain. They leave. A study of 200 companies by Charlie Trevor and Anthony Nyberg found that a layoff can trigger a wave of resignations that is sometimes bigger than the layoff itself. Their model predicted a 31% rise in people quitting after cutting just 1% of staff. Where fairness and belonging were weak, that rose to 112%.

Their work suffers too. Leadership IQ found that 74% of layoff survivors said their productivity had dropped, while 69% said the quality of their company's product or service had fallen.

Morale suffers. Research from the American Management Association found that morale falls in more than two-thirds of organisations within a year of a layoff.

And perhaps most worrying of all, some employees simply switch off. Research from the Stockholm School of Economics found that employees can actively hide their disengagement because they fear becoming the next target. Managers miss it and assume the organisation has settled down.

Put that together and the maths changes.

A badly handled redundancy doesn't just cost you the people you let go. It can cost you your best people, your productivity and your culture—at exactly the moment you need them most.

The good news is that how you handle it makes a difference.

Is It Really About AI?

Let's be honest. AI can be a very convenient excuse.

If the real objective is to cut costs and improve the bottom line, "AI transformation" can sound considerably more appealing than "we over-hired" or "sales are down."

But the promised returns don't always materialise. Gartner has found no link between AI-related job cuts and measurable returns. There's even a term for overstating AI's role in a cost-cutting decision: AI-washing.

That doesn't mean AI isn't genuinely changing organisations. Some businesses really are redesigning work, reducing headcount in certain areas while investing and hiring in others.

In our experience, the reality is usually a combination of factors: some AI, some cost pressure and some strategy.

And that's OK.

Cutting costs isn't a crime. Pretending you're not is the problem.

People can usually tell when the official explanation doesn't match what they're seeing. If the reason is cost, say cost. If it's strategic, explain the strategy.

The fastest way to lose the people who remain is to give them a story they don't believe.

What Happens Psychologically to the People Who Stay?

Joel Brockner at Columbia University has studied this for decades. He describes the phenomenon as survivor syndrome.

People who remain following redundancies can experience guilt, anxiety and distrust. Left unaddressed, those emotions begin to affect performance.

One of Brockner's most striking findings concerns fairness. How well departing employees were compensated influenced how committed the remaining employees felt towards the organisation—and whether they intended to leave themselves.

That matters enormously.

The people who stay are watching how you treat the people who go.

Every exit sends a message to everyone else.

Why Do Workplace Friendships Matter After Redundancies? This is where new research from KPMG becomes particularly interesting.

Its Friends at Work 3.0 report examined how workplace relationships influence how people feel and perform. Employees with close friends at work were the most engaged group. Almost half described themselves as "always engaged". They had greater trust in their organisations and CEOs and were also the most likely to embrace AI. But there's a twist. They were also the most likely to leave.

42% said they were likely to look for another job within the next year—almost three times the rate of other groups.

As KPMG's Sandy Torchia observed, the people carrying the greatest pressure, building the most trust and helping hold the culture together may also be the most likely to walk.

KPMG wasn't specifically studying redundancy, but put these findings alongside what we know about restructures and the implications become important.

A restructure cuts through friendship networks. Your most connected people lose colleagues they care about, absorb the grief of the team and frequently inherit additional work.

And they may already have one eye on the door.

Can You Have Connection Without the Cost?

Here's the part leaders don't always want to hear.

Workplace connection comes as a package.

Connected employees give organisations more: more effort, more loyalty, more trust. They hold cultures together and often lead the adoption of change.

But the same bonds that create those benefits also magnify the impact when things go wrong.

You can't take the benefits of a deeply connected team and then be surprised by the emotional cost when that team is broken apart.

If people genuinely feel like a tribe, redundancy doesn't simply feel like a commercial decision. It can feel like a threat to the tribe itself.

Belonging to a group protects our wellbeing. But the more strongly we identify with that group, the more personally we experience a threat to it.

So there's a price attached to creating a connected, high-performing team.

You have to be seen to do right by the tribe—especially when you're asking some of them to leave.

How Do You Handle Redundancy Well and Rebuild Trust?

Simon Sinek talks about creating a "circle of safety". People perform at their best when they feel protected from threats inside their organisation, allowing them to concentrate on the challenges outside it.

Redundancy breaks that circle.

Leadership's job afterwards is to rebuild it.

Tell the Truth and Keep Telling It

Survivors who rated their managers highly for visibility, approachability and candour were 72% less likely to report a drop in productivity.

Not charismatic. Not endlessly optimistic.

Present and honest.

Treat the People Leaving With Dignity

Give people proper notice, fair terms, support finding their next role and an opportunity to say goodbye.

This isn't only about treating departing employees well.

It's how you show everyone who remains what your organisation really values.

Name the Loss

Redundancy is an ending.

People lose colleagues, friendships, routines and sometimes the organisation they thought they worked for.

Don't rush everyone towards "the exciting next chapter". Give people permission to acknowledge what has happened.

Redesign the Work

If you cut a quarter of your workforce, you cannot simply redistribute all of their work among the people who remain.

Something has to stop.

Leaders need to be explicit about what the organisation will no longer do. Otherwise, the immediate cost saving becomes tomorrow's burnout and retention problem.

Give People Back Some Control

Research suggests that increasing people's sense of control can reduce some of the negative effects of redundancy and lower their likelihood of leaving.

Involve people in shaping the new structure. Ask what's no longer working. Give them genuine influence over how the new organisation operates.

Look After Your Connectors

Your most social and trusted employees may be carrying far more than you realise.

They're absorbing other people's emotions, helping colleagues make sense of what's happening and often holding the culture together.

Check in with them first, not last.

Look After Yourself

This is the part our CEO clients rarely ask about—and often where we spend the most time with them.

Leading redundancies is lonely. You carry the responsibility for difficult decisions while being unable to share much of what you're carrying.

Leaders running on empty tend to withdraw, become defensive or disappear into spreadsheets.

Unfortunately, that's exactly when employees need to see them most.

Get support. Have somewhere to put it.

What Are the Most Common Redundancy Mistakes?

There are several patterns we see repeatedly.

Using AI as a cover story. If cost is the real driver, people will usually work it out—and trust you less for pretending otherwise.

Going silent. Leaders often withdraw after an announcement because they believe they're giving employees space. Employees may interpret that silence as guilt, avoidance or indifference.

Getting the exits wrong. Cold, rushed and impersonal departures travel quickly through an organisation. Everyone remembers how colleagues were treated.

Redistributing work without removing any. It may work temporarily. Eventually, people burn out.

Treating the process as finished once the last person leaves. This may be the biggest mistake of all.

Because that's often when the real leadership work begins.

What's the Bottom Line?

Redundancy may be part of the world we're operating in.

But how you handle it remains a choice.

Get it wrong and you pay twice: once through the people you let go and again through the people who quietly disengage or leave afterwards.

The people who stay will remember how you made them feel. Make it something worth staying for.

Key Takeaways

• The redundancy itself isn't the biggest risk—the months afterwards are. Poorly handled redundancies can trigger further resignations, lower productivity and damage trust.

• The people who stay are watching how you treat the people who leave. Fairness, dignity and transparency shape whether survivors continue to trust the organisation.

• Don't use AI to disguise a cost-cutting decision. If the reason is financial, say so. Employees are far more likely to accept a difficult truth than a story they don't believe.

• Don't simply redistribute the workload. Reducing headcount must also mean making deliberate decisions about what work will stop.

• Rebuilding trust requires visible leadership. Be present, communicate honestly, give people some control and pay particular attention to the employees holding your culture together.

How We Can Help

At The Work Psychologists, we support leaders through restructures. We coach CEOs and senior teams as they make difficult decisions, and we help teams rebuild trust and performance afterwards.

If you're facing this now, let's talk.