The AI Era Is Creating a New Trust Crisis at Work. Great Leaders Respond With 3 Simple Behaviors

Layoffs are back in the headlines. Across industries, companies are restructuring, reducing headcount, and redirecting resources toward AI initiatives and operational efficiency. For many leaders, the focus naturally turns to cutting costs, productivity targets, and reassuring investors. But in my experience coaching executives for more than two decades, that’s not where the biggest damage occurs. The real casualty after layoffs isn’t productivity or efficiency. It’s trust. And once trust is broken, the costs can linger long after employees are gone. What leaders often miss When layoffs occur, leaders tend to focus on the people leaving. But there’s another group leaders often overlook: the employees who stay. These employees are asking questions that rarely appear in engagement surveys. Am I next? Can I trust leadership? Does this company still care about people? Does any of this matter anymore? When those questions go unanswered, something dangerous happens. Employees stop giving their full discretionary effort. They become cautious, withhold ideas, and protect themselves. The organization may still function, but trust starts to break down. One of the biggest myths in leadership is that people lose trust because of difficult decisions. That’s rarely what I see. Employees can handle bad news. They can handle uncertainty. They can even handle layoffs. What they struggle to handle is silence. What employees want to see and hear from their leaders When leaders disappear after difficult decisions, employees fill in the blanks themselves. And human beings are remarkably good at creating worst-case scenarios. A few years ago, I worked with the CEO of a mid-sized company that had just completed a painful round of layoffs. The reductions were necessary, and to his credit, he handled the departures with empathy and respect. But once the layoffs were over, he assumed everyone wanted to move on. So the leadership team stopped talking about it. For months, employees heard almost nothing beyond routine business updates. No acknowledgment of what people had experienced. No discussion of the company’s direction. No opportunities to ask difficult questions. Within six months, the company lost several of its highest-performing employees—not because they feared another layoff, but because they no longer trusted leadership to be transparent. In exit interviews, one theme kept surfacing: “I felt like I was left to figure things out on my own.” The CEO later admitted something that stuck with me: “I thought silence would help people heal. Instead, it made them wonder what else we weren’t telling them.” That’s the thing about trust. If leaders don’t fill the communication vacuum, employees will. So, let’s say you’re a leader who wants to regain trust. That’s great. Your starting point? It’s to aways remember that trust isn’t built by protecting your people from reality; it’s built by helping your people understand reality. That’s why communication becomes even more important after layoffs than before them. Three behaviors that rebuild trust The best leaders I’ve worked with and coached consistently do three things after workforce reductions. 1. They communicate early and often Not every answer will be available. That’s okay. Employees don’t expect perfection. But they do expect honesty. Leaders who provide regular updates—even when those updates include uncertainty—create stability during unstable times. A simple message such as, “Here’s what we know, here’s what we don’t know, and here’s what we’re doing next,” can go a long way toward rebuilding confidence. 2. They acknowledge the human impact Too many leaders move immediately to business metrics after people’s livelihoods are destroyed by layoffs. Their colleagues and coworkers notice. So, before discussing strategy, be human and acknowledge loss. Recognize the contributions of those who left. Give employees permission to feel disappointment, concern, or grief. Human-centered leadership doesn’t avoid emotions in something as traumatic as a layoff. It recognizes them. 3. They create opportunities for dialogue As we have determined, the remaining employees will look to their leaders for answers. But not through company-wide announcements alone. That doesn’t build trust. Trust grows through conversations. Managers should be encouraged to ask questions like: “What concerns are you carrying right now?” “What do you need from me to be successful?” “How can I support you?” These conversations demonstrate something employees desperately need after disruption: evidence that leadership is listening. The leadership lesson Layoffs may be a business decision. But trust is, and always will be, a leadership decision. The organizations that emerge strongest from difficult periods are not necessarily the ones that cut costs most effectively. They’re the ones whose leaders understand that people are watching how decisions are made, how communication happens, and how employees are treated when things get hard. At the end of the day, employees don’t expect leaders to eliminate uncertainty. They expect leaders to help them navigate it. And that’s where trust begins. EXPERT OPINION BY MARCEL SCHWANTES, EXECUTIVE COACH, SPEAKER, AND AUTHOR @MARCELSCHWANTES