The Headcount Solution : How to Cut Compensation Costs and Keep Your Best People

Managers should always see the amount of costs that can be trimmed in Rounds 1 and 2 of cost cutting before they resort to layoffs.

For a short recovery cycle, it is easy to see the drawbacks of layoffs as an effective cost-cutting tool because people must be rehired before the long-term benefits are accrued.

The real cost of a layoff includes selection, recruit- ment, and training costs for new hires in the future, all of which significantly eclipse short-term savings.

Layoffs are most effective if employed with other cost-cutting measures and alternative work arrangements that preserve critical human capital.