It's evident that companies are trying to save for the future by cutting costs now, but there could be other long term effects that these organizations are not taking into account, such as:
- Deterioration of corporate culture - massive layoffs may seem like a price saving option, but the effect on morale and culture, among other things, needs to be managed carefully.
- Inability to ramp up when the economy recovers - while we may hope that most organizations are keeping the future in mind, failure to forecast and assess when the economy will recover may result in companies scrambling to hire people back. This could be more financially damaging than riding out the wave with more moderate cutbacks.
- Productivity losses - layoffs can lead to improved productivity, assuming that companies properly selected weak performers and less essential positions; however, expanding the workload of remaining employees too much can lead to burnout, decreased engagement and poor morale.