“I’m sorry but we regret to tell you that you are one of the people we need to let go from work,” is no doubt the most dreaded announcement received by an employee. Work layoffs have become a common thing since last year when the recession hit the economy hard. But the fact is for more than two decades already the vast majority of companies have been decreasing their employees, without respect to the status of the economy. Unfortunately, despite profits showing improvements, most corporations consistently shed workers.

The reason behind these non-stop layoffs is due to a corporation’s desire to spread their wealth between the fewest possible members, although they may want to retain an otherwise useful employee. This move is clearly made in order to conform to the latest market size. Actually, there are indeed instances that cutting jobs is needed like when an industry is slowly diminishing or is permanently falling. But if your company belongs to the industry of the present time, then having a mass of layoffs will surely hurt your business instead of helping it. Also, it will not stop your company’s ultimate downfall, (which is your main aim in the first place) but instead will just delay it for a while. Wayne Cascio, a professor in the University of Colorado and author of “Responsible Restructuring” made a list of possible direct and indirect outcomes of layoffs which are:

• Severance pay
• Paying out accrued vacation and sick pay
• Outplacement costs
• Higher unemployment-insurance taxes
• The cost of rehiring employees when business improves
• Low morale and risk-averse survivors
• Potential lawsuits, sabotage, or even workplace violence from aggrieved employees or former employees
• Loss of institutional memory and knowledge
• Diminished trust in management
• Reduced productivity

Just think about it, once a company decreases its number of employees, customer service, productivity and improvement will also lessen and the staffs will feel discouraged to work. Establishments suffer big costs once they cut down employees, which include big separation pay and outplacement. It will also cause low morale and decreased productivity with the remaining workers as they’ll feel anxious about whether or not they will be the next person to bid farewell from work.

To avoid trouble when performing layoffs, companies should be very specific who is going to be cut off from work. It will eradicate worry from other workers – especially the most treasured employees in the company – so they can perform their tasks well without the fear of being the next person to walk out the door. Another tip is to offer generous separation packages and letting those fired workers advanced notice to see their colleagues off. Doing those things will lessen the pain in the individual’s self-esteem and overall morale. Talking and explaining to workers why you need to layoff staff is highly recommended. Some companies even cut off senior executives and not just front-line staffs to avoid any excessive or unfounded resentment.

Unnecessary layoffs will not only greatly hinder a company’s success but is also harmful to the economy and demoralizing for the workers as individuals. Even in a healthy economy, this principle remains true.