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Wednesday, April 8, 2009

Experts Say Jumping the Gun on Layoffs Could Hurt Companies During Recovery

Like cutting marketing budgets, layoffs are one of the most common, immediate responses of businesses to an economic downturn. The negative impact on companies of reducing marketing budgets during a recession has been well documented in the business literature. And now, experts are weighing in with assessments that workforce reductions, too, may do companies more harm than good.

Quoted in an April 7 story from the Associated Press (AP), University of Central Florida economics professor Sean Snaith, who also heads the Institute for Economic Competitiveness at the university, cautioned that workforce reductions during the recession could handicap the ability of companies to benefit from the recovery once it begins.

The AP story also reports that, although more than 70 percent of companies have resorted to layoffs during the current recession, more companies than in the past are pursuing alternative cost-saving measures due to the known negative impacts of layoffs.

Among examples cited in the AP story of companies that are avoiding layoffs is Costco Wholesale Corp. (NASDAQ:COST) which, in spite of a more than 25 percent decline in profits, has not pink-slipped any permanent employees. Sphere: Related Content

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