Geopolitical turmoil, disrupted supply chains, mergers, rapidly advancing digitalization, rising costs, and declining revenue are among the factors leading to economic challenges for companies. To remain competitive, some companies are being forced to cut staff during this crisis.
Contents
Staff reductions are sometimes unavoidable—how should managers handle them?
Why may staff reductions be necessary?
What should leaders look for in the process?
Practical Support: Compact Coaching Journeys with Four Sessions
Conclusion: Managing Workforce Reduction Successfully—Providing Targeted Support to Managers
Staff reductions are sometimes unavoidable—
. How should a manager handle this?
Geopolitical turmoil, disrupted supply chains, mergers, rapidly advancing digitalization, rising costs, and declining revenue are among the factors leading to economic challenges for companies. To remain competitive, some companies are being forced to cut staff during this crisis.
The latest figures from the Federal Statistical Office show just how pressing this issue is: At the end of the first half of 2026, the manufacturing sector in Germany employed about 144,100 fewer people than a year earlier—a decline of 2.7%. The automotive industry was particularly hard hit, with 42,300 fewer employees (–5.8%). The situation remains tense for the coming months as well: According to the ifo Employment Barometer from September 2026, companies in industry and commerce continue to plan job cuts for the most part (1, 2).
Prominent examples illustrate the scale of the situation: According to its annual report, Volkswagen plans to cut approximately 50,000 jobs in Germany between 2025 and 2030. In September 2025, Bosch announced the need to cut an additional 13,000 jobs, particularly at its German mobility sites (3, 4).
Staff reductions not only bring about organizational changes, but also present new challenges for managers. How do you break this bad news in the right way? How do you ensure that the company’s image remains intact, and how do you retain and motivate the remaining employees during this uncertain time?
In this blog article, we look at why downsizing may be necessary, the exact challenges leaders face during this process, and how coaching can help them successfully overcome these changes.
“Great is the art of beginning, but greater is the art of ending.” — Henry Wadsworth Longfellow
Why may staff reductions be necessary?
Workforce reduction, also known as layoffs, refers to the reduction in the number of employees in a department or an entire company. Employees are laid off for several reasons, such as when the order situation deteriorates, when staff become redundant due to digitalization and technological advancements, or when a merger is imminent (5). Staff reductions lower personnel costs, giving companies the flexibility to reallocate resources toward a stable future.
Staff reductions can therefore potentially make companies more profitable again, which in some situations may be necessary for a company's survival and, consequently, for saving many jobs.
The decision to cut staff may be essential for the company’s survival, but for the people affected, it can be a major crisis. Having to say goodbye to beloved colleagues and working with the fear of being the next to go leaves a bad taste in one’s mouth: Among the remaining staff, this can lead to a loss of employee loyalty, unproductivity, uncertainty, and much more.
There is therefore a risk that, following the staff reductions, the situation could deteriorate both emotionally and economically (6)—and that must be prevented at all costs.
Managers are the link between management and employees and have a very important role during this process. They are at the forefront of conducting the redundancy discussions in an appreciative manner with those affected and also managing and accompanying the entire process for the remaining employees and achieving the reduction targets.
What should leaders look for in the process?
The most important task of managers during staff redundancies is, on the one hand, to conduct the discussions with the affected persons in a professional manner and, on the other hand, to maintain the motivation and loyalty of the existing staff. The following aspects are important for this:
Conduct difficult conversations
Managers should be able to handle difficult conversations. For one thing, it is part of their job to convey bad news professionally and to discuss the termination of an employment contract—the bad news should not be made to seem worse than it is. Workforce reductions require clear and honest communication (6).
The manager's goal should be to ensure that the laid-off employees would accept a new employment contract with the company once the business situation improves. How is that possible? That brings us to the next point: through transparency.
Transparency
To foster trust and credibility, management should transparently communicate information about staff reductions and the company’s future—for example, the reason for the cuts, when the process is expected to be completed, how many employees will be laid off, and the importance of treating people with humanity. Managers should feel free to share that it is not easy for them to let employees go.
This is the only way to ensure that employees can understand the decisions—as difficult as they may be—and remain loyal and motivated, and want to come back.
Promoting employee loyalty
The loss of colleagues makes remaining employees wary. They fear losing their own jobs and perceive the entire process as unfair. For this reason, it is important to fulfill the expectations and obligations set forth in the psychological contract between employees and the organization.
Since a breach of this trust leads to lower loyalty and commitment, managers should take steps to retain employees. These could include, for example, more frequent one-on-one meetings, showing special appreciation through personal feedback, or offering goal-oriented and supportive development opportunities.
Dealing with emotions
However, a manager’s responsibilities include not only delivering bad news but also addressing the emotions of both those who are staying and those who are leaving. Staff reductions often mean that (long-time) colleagues must leave the company. Managers should support employees as they say goodbye to colleagues they’ve grown fond of and take other emotions—such as guilt, fear, anger, and rage—seriously.
During such a stressful time, they must brace themselves for increased irritability, finger-pointing, and a decline in trust. Leaders are expected to show empathy and respond appropriately. But even for them, staff reductions can lead to uncertainty, doubts, and a wide range of emotions—which is quite challenging for leaders!
Recent data also shows that leaders are under increasing pressure: In the 2026 State of the Global Workplace Report, Gallup reports that the percentage of engaged leaders worldwide fell from 27% in 2024 to just 22% in 2025. Although these figures refer to managers as a whole, they highlight how important targeted support is, especially during stressful periods of change (7).
How the company handles this crisis will lay the foundation for its fresh start—managers play a challenging and crucial role during workforce reductions. They can’t always do it on their own. That’s why, dear HR team, managers need extra support right now.
Coaching can help managers
Studies show that coaching helps executives manage their emotions, communicate with employees, manage change, and reflect on their actions.
Staff reductions can be emotionally challenging for managers as well. Support from a professional coach helps them manage these emotions, better understand their fears and uncertainties, and cope with difficult situations and frustrations. A coach can help them reflect on their own attitudes, process their emotions, and keep a clear head.
Coaching, therefore, creates a space to better manage employees’ emotions and foster a sense of appreciation. In addition, a coach helps improve communication skills, such as listening empathetically and showing understanding.
But that’s not all! Resilience is strengthened through coaching (Want to learn more about resilience? Click here). Resilience enables leaders to better cope with the challenges of workforce reduction. At the same time, coaching during workforce reductions allows leaders to learn more about themselves and work on their personal development.
By reflecting on their own behavior during the process, they can improve their leadership skills.
Practical Support: Compact Coaching Journeys with Four Sessions
From our work with companies, we know that executives often need short-term, targeted support, especially during periods of workforce reduction. At thankscoach, we’re currently having particularly positive experiences with compact coaching journeys consisting of four individual sessions.
Experienced business coaches work closely with executives to help them tackle the specific challenges they face in their day-to-day work: from preparing for difficult termination conversations to managing emotional reactions and stabilizing the remaining teams.
The coaching is personalized, confidential, and directly tailored to each specific leadership situation. This allows leaders to discuss specific challenges, develop new strategies, and apply them directly in practice.
After all, downsizing isn't just about cutting costs. It's also crucial to maintain the trust, motivation, and performance of the remaining teams as much as possible.
You can learn more about specific coaching goals on our page “Supporting Staff Reductions Responsibly.”
Conclusion: Managing Workforce Reduction Successfully—Providing Targeted Support to Managers
Workforce reduction is one of the most difficult challenges facing companies and their leaders. In addition to economic and organizational decisions, the key is to maintain trust, support employees with respect, and ensure the motivation and performance of the remaining teams. After all, the desired economic goals can only be achieved sustainably if collaboration continues to function effectively even after the workforce reduction.
Managers play a crucial role in this process. They must have difficult conversations, deal with uncertainty and emotions, and at the same time remain capable of taking action. They do not have to bear this responsibility alone.
Personalized business coaching offers targeted and practical support in this area. Even short coaching programs consisting of just four sessions can help executives prepare for challenging situations, strengthen their leadership skills, and guide their teams confidently through change.
Would you like to provide personalized, targeted support to executives during workforce reductions? Schedule a no-obligation demo call now.
Federal Statistical Office (2026): Job Cuts in the Automotive Industry: 42,300 Fewer Employees at the End of the First Half of 2026.
ifo Institute (2026): Companies Cut Slightly Fewer Jobs – September 2026.
Volkswagen Group (2026): 2025 Annual Report – Letter to Our Shareholders.
Robert Bosch GmbH (2025): Measures to Close the Cost Gap at Bosch Mobility.
Cascio, W. F., & Montealegre, R. (2016). How Technology Is Changing Work and Organizations. Annual Review of Organizational Psychology and Organizational Behavior, 3(1), 349–375.
Gallup (2026): State of the Global Workplace Report 2026.
