When times get tough, it's easy for your eyes to be drawn to one of the largest expenditures on your books: payroll. It's also easy to see the benefits of letting some people go, "get rid of the chuff and slackers," and tighten up the company; releasing money to go to other, much starved departments. In an article on Bnet, Carlos Bergfeld writes about how people – bosses and experts – overlook the unexpected consequences of layoffs.

One such consequence is almost too obvious to notice. In most layoffs, the budget looks great for a few quarters, but then everything begins to suffer. A reason for this is that with the loss of sales or marketing people, they tend to take their clients with them. Maybe not right then, but over time customers will seek out those they have a good relationship with. Also, remember that any initial gains from layoffs will be lost as you seek to hire replacements to get your company back up to speed.

Another, more psychological consequence is what happens to the survivors of layoffs. From their perspective, they may not understand why some people were fired and others not. Far from being relieved that they still have their job, they may go into survival mode; thinking that it's only a matter of time before they get the axe and prepare accordingly. This could lead to your best and brightest jumping ship before they are made to walk the plank.

Every action has an equal and opposite reaction. Before you take any drastic measures, make sure you understand the effects your decisions will have down the line.