By Alvin Aloysius Goh
In my early years as a consultant, I had to conduct a retrenchment exercise for a client. I can still vividly remember the older employee who had spent over two decades with the company. As I delivered the news, he quietly thanked me, his voice trembling with pain and uncertainty. He was the sole breadwinner, with children still in school. He told me he could not bring himself to break the news to his family.
No amount of training could have prepared me for the weight of that moment. Since then, I have believed that retrenchment must never be mechanical; it must be humane.
When Leadership Meets Humanity
Recent layoffs across various sectors have reignited anxieties among workers, even as companies cite restructuring as a required step to stay competitive. However, the way organisations handle retrenchments often reveals more about their leadership and values than their hiring practices. Retrenchment tests whether leadership truly supports its people when it matters most. It is not uncommon for employees to be handed envelopes and escorted out the door. Yet retrenchment decisions should never be reduced to transactions. A responsible leader must balance business imperatives with empathy, preserve dignity, explore redeployment or retraining before cutting jobs, and ensure that support systems are in place for those affected.
Ethical leadership goes beyond compliance with tripartite guidelines or procedural checklists. It involves early engagement with unions, transparent communication with affected employees and offering outplacement support. It is most impactful when leaders exercise moral courage, making difficult decisions guided by compassion rather than convenience.
Hard to say Goodbye
Research has shown that long-term unemployed individuals experience more than twice the prevalence of psychological issues compared to those employed. It is not as simple as losing an income stream. Work provides structure, social contact, as well as a sense of identity and purpose. When these vanish for a prolonged period, many struggle with confidence and self-worth.
The weeks and months after retrenchment can be especially challenging. Many avoid social gatherings because the simple question, “How’s work?” feels unbearable. Companies can continue to play a role even after employees have left by keeping alumni networks active, providing references or checking in periodically. Even small gestures, such as extending medical benefits for a short period of time or offering financial advice, can make a tangible difference.
For those re-entering the workforce, the challenges do not end when they find a new job. A person walking into a new office after a long job search often carries invisible baggage: months of rejection, diminished self-confidence and anxiety about performance. Ethical leadership means easing this weight. Managers can schedule regular check-ins, pair new hires with peer mentors, and foster an environment that celebrates progress rather than perfection.
We must also consider the remaining employees, often called “surviving employees”, who have to cope with heavier workloads, job insecurity and a lingering sense of survivor’s guilt. They need reassurance, direction and a renewed sense of confidence in the organisation’s future. Leaders who communicate openly and honestly can help restore purpose and strengthen resilience within their teams.
Turning Systems into Support
Ethical leadership does not exist in isolation. It must be supported by systems that enable compassion to take practical form. Singapore’s enduring partnership between the government, employers and unions has guided the nation through many economic transitions, helping companies make difficult decisions responsibly.
Our HR professionals are at the heart of this system. They are not merely messengers of difficult news but custodians of organisational culture and conscience. Their role is to ensure that business imperatives are balanced with humanity and empathy. The way people exit and re-enter organisations defines how trusted and resilient those organisations will be in the long run.
At the Singapore Human Resources Institute (SHRI), we have seen how companies that embed empathy and fairness into their retrenchment and rehiring processes tend to recover faster and retain stronger reputations. Ethical leadership is not a lofty ideal. It is a practice shaped by everyday choices, especially when those choices are difficult. Leaders who handle retrenchment with empathy and foresight often find that even in loss, trust and respect can still be earned.
At its core, ethical leadership is about recognising that every decision affects people’s lives and families. It is about choosing to act not only in the interest of profit and shareholders, but in the service of people whose lives and families are at stake.
