[cjbgkagh]

I think it’s about minimizing agency cost, to encourage workers to work in the interest of the company instead of purely their own interest. This is hard to do even in the best of circumstances. If people see that there is no connection, or even an inverse connection, between working hard and being rewarded they’ll find creative ways not to work hard. I’m sure people currently working on efficiency initiatives are now a lot less motivated from them to succeed.

Not saying that they should have kept the employees, they just keep in mind that short term greedy can come at the cost of long term greedy. I think the real problem is often executive compensation incentives short term greedy behaviors at the expense of long term greedy behaviors, so while this decision may not be in the best interest of the company I’m certain it’s in the best interest of the execs.

One alternative to hiring/firing would have been for existing staff temporarily work harder with offers of large bonuses. Maybe they tried that as well. This would only be effective in some areas of work so some hiring/firing correlating with demand would still be needed.