I’m starting my MBA next year. After working in tech for a while, I’ve seen what happens when companies face hard times. Too many managers choose layoffs first. It’s a quick way to cut costs and make a report look good.

But the facts show this can hurt the company. The workers who stay often feel scared and become less productive. And companies that make big job cuts often do worse than their competitors for years.

The Real Cost of Firing People

We’ve all seen this happen. When Elon Musk bought Twitter, he planned to fire almost three-quarters of the staff. These huge cuts left the company without enough people to handle important jobs like content safety and keeping the site running. As a result, advertisers got nervous and pulled their money. This wasn’t just a news story, it actually changed how the product worked. That’s why lot of alternatives of Twitter/đť•Ź were created and people shifted to platforms like Mastadon and Bluesky.

Now, compare that to leaders who decided to share the pain instead.

In 2020, when the travel business was in trouble, Marriott’s CEO gave up his salary for the year. His top leaders also took big pay cuts to save jobs. This showed everyone they were in it together.

During the 2008 crisis, Honeywell used temporary unpaid leave and shorter workweeks instead of firing people. They kept their skilled workers, which helped them get back to full speed much faster than other companies when business improved.

These leaders understood something important: your employees are not just costs on a page. They are the people who will help your company recover and grow.

A Better Plan for Hard Times

As I get ready for business school, I’m thinking about a better way for leaders to handle cost-cutting. It’s about being smart and careful, not just making deep cuts. I want to be a real leader, not just a manager who only looks at numbers.

Here’s my plan:

  • Leaders Go First! Before anyone is fired, the top leaders should take a real pay cut. It’s the only fair way to start, and it shows they are sharing the burden.

  • Cut Waste, Not People. The next step is to freeze hiring and use fewer outside contractors. Look at the budgets and stop projects that aren’t working. Find waste to cut before you think about cutting jobs.

  • Move People to New Roles. Instead of firing good employees, train them for new jobs inside the company where they are needed.

  • Try Temporary Fixes. For temporary problems, use temporary solutions. Ask people to take unpaid leave or work shorter weeks. This keeps your team together and ready for when things get better.

  • If You Must Fire People, Be Kind. Layoffs should be the very last choice. If you have no other option, do it with honesty and respect. Offer good severance pay to help those who are leaving and to keep up the spirits of those who are staying.

  • Getting a company through a tough time is one of the biggest tests for a leader. You have to balance saving money with doing the right thing for your people. The easy path is to fire staff. The right path is to protect the people who make your company work.

Thats the kind of leader I would want to be.