Turns out layoff are bad for workers, the company and the economy. Consider this: SouthWest Airlines has never had an involuntary layoff in their 40 year history — and they are now the largest domestic US airline. Layoffs kill worker morale, erode loyalty, often lead to the best workers leaving with a loss of corporate memory. These negative effects linger long after the layoff event, even into periods of economic recovery. Conventional wisdom that they save the company money are also normally misplaced once all expenses, from payouts to departing workers to losses in productivity, are calculated. All this is not to say that companies don’t need to restructure periodically — it is just that management should be looking far enough ahead and watching current trends closely enough to know when conditions change. Reactive business strategy– like layoffs or across the board percentage cuts – is always too little, too late. Bad times reveals weakness.
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