LAYOFFS OFTEN COME with unintended consequences – ones that occur long after the pink slips are handed out.

While layoffs are obviously hard on departing employees, they also take a toll on the workers left behind. “They are seeing people they know personally lose their jobs,” says Jeffrey Summer, a principal in the talent management practice at PricewaterhouseCoopers in New York. “That’s pretty traumatic.”

Once the initial shock of losing a co-worker recedes, then the uncertainty sets in. Remaining workers may question why they weren’t laid off or where they stand going forward. That fear can breed anxiety and resentment – and may even prompt key employees to look elsewhere for new jobs, says Summer. It could also take a toll on productivity as employees spend more time worrying about job security and less time thinking about the actual work.

Here are four steps to help you manage the aftermath of layoffs.

Be transparent…

“Remaining employees are most fearful of arbitrary layoffs,” says Ray Friedman, a management professor at Vanderbilt University in Nashville, Tenn. To put people at ease, it’s vital to be as honest as possible about why certain positions were eliminated, he says. Notify everyone of your strategy. Was it last in first out? Were your actions based on the latest round of performance reviews? Are you shifting the business's model?

Also, make sure employees know what other cost-cutting measures you took before this step, says Kathryn Kerge, president of Kerge Consulting, a human resources strategy firm in New York. Be clear about what they should expect going forward. And, to the extent you can, allay fears about future layoffs. “Just make sure you can deliver on your promises,” she says.

...and respectful

“A layoff is not like firing someone for cause,” says Friedman. “Having a security guard show up and escort [laid-off workers] to the door would not be viewed favorably." Make sure, however, to do everything you can – within reason, of course – to ease your departing employees’ transition. Provide references and offer help in their job search. If you can afford it, offer severance pay. Not only will exiting employees appreciate the efforts, workers who remain in the office will know that if they face a similar predicament they'll be treated with respect, he says.

Provide forums and counsel

Allow and encourage employees to ask questions, says Friedman. Provide an email address or phone line in which employees can ask questions or voice their concerns without having to reveal their identity. And since remaining employees will likely have mixed feelings about watching their co-workers leave, bring in a counselor or human resources representative to help deflect angry or anxious sentiments.

Reward key personnel

To help you keep key employees from running to the competition after a layoff, give them more responsibility and affirm their value to the company, says Summer. “Explain what’s going on and how they fit in,” he says. Also, think about including these pivotal workers in the company’s post-layoff plans. Perhaps they’ll have new managerial responsibilities as those further up in the food chain are let go. In addition, you might reward these workers with incentives or added pay, says Summer.

-Write to Diana Ransom at dransom@smartmoney.com

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