Over the past three years, corporate CFOs have undergone an intense practical exercise in responding to financial emergencies. Layoff decisions have been particularly difficult because they not only affect the success or failure of the enterprise but also directly impact the lives and livelihoods of employees and their families.

As CFO, how you communicate these major changes is crucial, as it will determine the logic and tone of the company's messaging both internally and externally.

Recently, several cases of poorly handled layoffs have served as a wake-up call. For example, Google sent layoff notices to employees' personal email addresses, causing those who did not check their email to come to work as usual, mistakenly believing their jobs were still intact. Similarly, some Twitter employees did not realize they had been laid off until they found they could not log into company computers because they had not checked their email; worse, Twitter's notification emails were sent by a third-party service provider, and many recipients mistook them for phishing emails.

Looking back at these and other large-scale layoffs this year, it is not difficult to summarize "negative examples." But layoff communication is not destined to fail. The following six-step strategy can serve as a reference for CFOs when considering layoffs, to alleviate the inherent pain of the process:

Step One: Develop a Communication Plan Early

It is crucial to prepare a layoff communication plan in advance. The best time to develop it is "now"—even if the company is currently performing well. Planning ahead helps determine the tone and strategy of communication and clarify the internal and external audiences that need to be covered, so that negative news can be delivered when necessary.

Step Two: Clarify Who to Notify and How

Layoff decisions do not occur in isolation. As CFO, you are usually the one providing the hard data to justify the layoffs. Therefore, the final decision should be made and owned collectively by all members of the C-suite, and the board of directors should also understand the reasons and methods behind the layoffs. After that, the message should be cascaded down the organizational structure until it reaches the direct supervisors responsible for notifying affected employees. Ideally, affected employees should first hear the news from their immediate superiors (in person or via video conference), followed by an announcement from the CEO to the entire company. The timing of notifications needs to be adjusted based on company size—multinational companies need to consider time zone differences and may need to conduct notifications in phases over 12 to 24 hours.

Step Three: Understand the Dual Impact of Layoffs on the Company and Individuals

The attitude a CFO takes when recommending layoffs greatly influences how the announcement is received. Showing empathy, understanding, and genuine concern for the well-being of affected employees is always the best first step. Tone is critical, and a layoff notice should never be framed as "nothing personal." Layoffs are highly impactful events for individuals, and acknowledging this helps convey the difficulty of the decision.

Step Four: Clarify Compensation Packages

The first reaction of employees after receiving a layoff notice is often: "What about me and my family?" These questions should be answered as quickly and clearly as possible, including: whether the company provides severance pay, who receives it and under what standards; details on the continuation of insurance coverage; career counseling and job search resources; the effective date of the layoff and other key information, to eliminate doubts in advance.

Step Five: Maintain Transparency

Laid-off employees are experiencing a unique form of shock and trauma. The company should not pretend nothing has happened internally. All employees—whether laid off or retained—should understand the reasons behind the layoff decision. Please specify why the company is reducing its workforce: Is it because a facility is no longer profitable and is being closed? Or is it due to geopolitical or other economic factors? Additionally, mention the measures that were taken to avoid layoffs, such as whether executives agreed to salary reductions or whether buyout packages were offered to long-term employees. Remember, employees should never be made to feel that the layoffs are their fault. The ultimate success or failure of the company lies with you and your C-suite colleagues—take responsibility courageously.

Step Six: Maintain Executive Accessibility

The market or internal communications department needs you as a resource to help draft public announcements. They need your assistance in explaining the economic factors behind the layoffs and their impact on the company. Depending on the company's size, you may also need to represent the company in media interviews. Work with the public relations team to develop talking points that focus on core messages while answering questions truthfully.

Of course, the ideal scenario is that the company's goals—whether improving profitability or growth—can be achieved without layoffs. But if you follow the six steps above, when unfortunate situations do occur, you and the company will be better equipped to deliver clear, empathetic, and transparent messages to employees and the outside world.