I, too, once believed in the dogma of downsizing. Fresh out of graduate school with a Ph.D. in psychology and eager to make my mark on the corporate world, I naively took commands from higher-ups. Sure, I was laying off employees but, let's face it, most were outdated, skill-deficient workers anyway. All told, I personally fired hundreds of employees and planned for the batch firings of thousands more. Slowly, I began to see what really happens after a layoff.
Morale hits rock bottom.
Lines of communication within the company shatter. Productivity ebbs while high-priced consultants try to patch the business back together. Evidence that downsizing is bad for both companies and employees goes far beyond my own anecdotal experience. During the past decade, studies have shown a mass layoff often doesn't help a company, and, at worst, it can be the deathblow to a faltering enterprise. The lost time, waning productivity, and devastated morale create hidden costs, which can far outweigh the usual cost-savings predicted from a layoff.