There are some short-term costs associated with providing generous severance packages and displacement assistance (minus 3), but surviving employees' morale is boosted, keeping their productivity high (plus 10). Longer-term, word will get around that this is a decent, fair place to work at, so down the road, when cash flow improves and it's time to beef up the workforce again, you get the pick of talented recruits that want to sign on to your firm (plus 5). The local chamber of commerce takes note of your commendable behavior and awards the firm a good citizen certificate, which is reported in a leading newspaper. This is, in effect, free marketing that casts favorable light on the company's name (plus 3). On the other hand, making sweeping cuts with no assistance creates a perception of meanness and cruelty, leading to a sullied reputation as a bad place to work and substantial negative publicity propagated through the rumor mill (minus 10). One employee is angry and feels that you discriminated against her, so she sues the firm, requiring you to mount an expensive legal defense (minus 7). However, if you downsize by simply letting employees go swiftly, with no regard for assistance, there are some lower short-term costs (plus 5).Downsizing brutally results in − 12, while downsizing compassionately results in + 15. The results point to the kinder, gentler option.
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