If cuts do become necessary, be swift and fair. They must be fair both in reality and perception, Mr. Slayton says. If they aren't, he warns, employees start obsessing about layoffs and spend much of their time looking for their next job. That starts a downward spiral that must be avoided at all costs, he says. But Mr. Bennett says you can't hesitate if cuts are needed.
Delays just cause discontent and uncertainty to eat away at the organization.
Besides, some cuts need to be made. Send significant, symbolic signals of sacrifice. Maybe it's eliminating certain events or parties or selling unnecessary equipment. Perhaps it's senior management taking the first salary cuts, sending the message that the pain will be shared by all. Finally, don't waste time in denial.