Employees can be rattled seriously by mere rumors of a layoff. Then, as it's nearing completion, you're quite frankly doing more work with fewer people. This puts excessive hours on people's schedules and stress in their lives. It takes its toll on people's health and work habits. To make matters worse, the remaining workers may start to bail out.
People see downsizing coming and they start leaving.
It's not just a numbers problem. You lose intellectual capacity and experience. All that combines to put additional workload and pressure on everybody. Even after he learned his job was not in jeopardy, Luther worried about his co-workers. I had many people come into my office who were very, very upset and were trying to figure out where their career was going.