Times are tough. Downsizing is the often convenient way to cut expenses and meet improved earnings forecasts you think. Not so fast! Get your hand off that trigger and don't pull it until you consider this: downsizing is far more harmful than good. Not only is the human toll significant, you won't get the economic benefits you were hoping for over time.

Bain and Company (www.Bain.com) conducted a landmark study which looked at the effects of downsizing. They found that companies that downsized not only did not benefit from expense reductions significantly, over a short time period they actually increased as the companies in their study scurried to backfill people with more costly temporary workers and consultants. Even more interesting for public companies hoping for a positive rise in their stock prices, that didn't happen in any significant way over time either. Stock price barely edged up and in many cases it went sideways or worse.

The more obvious negative side effects of downsizing are low employee morale, loss of faith in the organization's leadership and the general deteriorization of an organization's culture as trust evaporates the instant the first pink slips are delivered. Institutional knowldge disappears. Once an organization's associates feel betrayed, organizational trust is often difficult, if not impossible, to regain.

Often, this can directy translate into much lower productivity. Even worse, a downward spiral in the marketplace can actually accelerate problems which created the original downturn: suppliers get nervous and turn away, customers lose confidence and begin to look elsewhere, and top performers who weren't cut either leave or begin to look for another company to avoid being cut in the future.

Cutting is easy. Tearing down is easier. Demolition is an idiot's game. "Strategic pruning" only results in stunted growth over time. Building up an organization to create revenue growth and customer satisfaction is much harder to accomplish but is the only true road to health. Instead of downsizing, most organizations would benefit more by building upon core strengths and forgoing salary raises and bonuses short term in difficults times. Even going into the red for a period of time is better than laying people off studies show.

Talking a growth solution approach has consistently been shown to be the best way out of the wilderness. Most managers have been trained to only think that business downturns means layoffs and proceed to implement them like robots. New products, new customers and new markets are difficult to develop and maintain. There is no alternative to growth.