Source: Jody Hoffer Gittell, Perspectives on Work, Summer 2006, Volume 10, no. 1
Layoffs often make sense from a traditional management perspective as a way to weather the storm by adjusting supply to demand. When demand drops, managers often reduce supply and lay off excess workers to avoid paying them when revenues are insufficient to cover costs.
Another perspective, however, stresses that high-performance work systems (which produce value for workers, managers, and investors) require loyalty and commitment in order to work effectively. According to this view, managers should seek to avoid layoffs when demand falls. Furthermore, if relationships help individuals and organizations bounce back from a crisis, then it is important to avoid harming relationships at such a critical time. From this perspective, layoffs are a problem, not a solution.