From Knowledge@Wharton: When Circuit City in 2007 that it was laying off 3,400 workers so it could rehire new ones at lower salaries, it raised the question of just what strategic benefits the company — or any company — expects to achieve through employee downsizing. Clearly these benefits depend on the underlying strength of the organization and the specific reasons behind the cost-cutting, but most experts agree that unless layoffs are part of a well-planned strategy, the move could cause as many problems as it was intended to cure.

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