The Downside of Employee Layoffs

In a "down" economy, the first thing many businesses decide is to layoff employees.

It's not a great idea, since it is a short-term fix at a long-term cost.

William McKinley, in an article titled Organizational downsizing: constraining, cloning, learning,
wrote that "While downsizing has been viewed primarily as a cost reduction strategy..there is considerable evidence that downsizing does not reduce expenses as much as desired, and that sometimes expenses may actually increase."

Employees should not be viewed as an expense, but as a capital investment.

F. John Reh argues that businesses need to consider the reduced morale and the reduced performance and innovation it will bring, and to consider the reduced quality of the company's overall workforce that will result.

Tomorrow, we'll discuss alternatives to laying off employees.

Courtesy about.com (management).