The media regularly report stories of corporations — both large and small — downsizing their staffs. When this occurs, most people instinctively focus their attention on the newly laid-off workers, as they are the ones most acutely experiencing the immediate effects. However, we should also examine the negative effects downsizing has on a company. While it’s true that downsizing may provide a decrease in operating expenses in the near term, the long-term impact may not be so positive.

The past several decades have been a time of both economic contractions and expansions. Although at times the outlook has appeared bleak, every decline has been followed by a subsequent period of growth. When “Black Friday” occurred a few short years ago, many thought the stock market was teetering on the brink of a cataclysmic collapse. What followed, however, was one of the longest-lived periods of economic prosperity in memory. The lesson here is that there will be a new economic tomorrow, and in all likelihood it will begin by mid–2002.