i was asked the above question during one of my interviews.
Although i answered that i will talk with each of the employees individually and try to make comfortable in the current position but still i think there may be a better answer for this question.
The scenario is as follows:
suppose i have 5 members in my team and my org is laying off 2 members, in that scenario how to handle the team
Be honest and tell a person the real reason why he/she is going to be laid off.
Please look at this question. Maybe you find there what you are asking.
Be truthful. The remaining staff have a right to know what the situation is - this is their livelihoods and their careers. If they decide to jump from a sinking ship then that's their prerogative.
1st, tell them what you can, which may not be all you know, or you may not know very much yourself. If you don't know much, and won't until the hatchet falls, tell them that. If you don't have input into the decision, tell them that as well. These people will grudginly understand your remaining silent on matters relating to your empoyer's prerogitives, but if you affirmatively deceive them when it comes to their prospects for continuing to support their family, you will lose them permanently. Share with them the benefits of your experience in with your employer ( it is likely to be greater than their own) and you experience in your community. If there are abrupt parts of the process, prepare the employees for them. If there are parts that seem inconsiderate or careless to the unfortunate employees, but the employer has good reason for them, explain the reasons. Demonstrate as much expertise in the process as you can, so they can feel that what information you do impart to them, can be relied upon. Be sure to communicate that your organization will apply the same values (and virtues) in this business decision as it does in all the others. I say virtues, because it will be important that the employees who remain know that, even during this toughest of times, that you organization maintained it's core values. If your organization is all about customer service, then stress that each decision will be based on what which choice will ultimately provide the best customer service. This will help explain why their best buddy got let go but that pompous jerk in networking (who can assemble a router blindfolded) remained. Remind them that this is not a popularity contest and this is not a rejection of them personally or professionally. Be proactive in keeping them informed, sometimes even telling them that you don't have anything new to tell them. If they allways have to drag the information out of you, they'll think your just trying to lay low until it blows over.