Almost everyone is expecting the unemployment rate to only increase. Small businesses are certainly going to be hit by those job losses. The most recent NFIB survey said that in the month of October, small business employment fell by eight percent, and it went down ten percent the month before that. Laying off employees is an obvious way to save money during a recession.
But could it actually be costlier in the long-run to lay off an employee?
This New York Time article from yesterday gives some reasons to think so:
The reality for employers is that scarce talent will still be scarce when the economy improves, said Laura Sejen, practice director for strategic rewards at Watson Wyatt, the consulting firm. In past recessions, “the employers that emerged more intact were the ones who had not done the very extensive slash-and-burn kind of layoffs,” she said.
The question employers should be asking themselves is: do the employees I'm laying off provide hard-to-replace, creative skills that could be key to innovation and growth for my business when this recession turns into an upswing? If so, the temporary cash flow boost you get from laying those people off could be a net loss in the end.
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