Most of us have had friends and colleagues who were laid off, or we know people who have had to lay off people. Maybe you were laid off or had to lay off people.

Downsizing has become a way of life as organizations struggle with cutting costs to adjust to market demands and an uncertain economy. Though this task is never easy, downsizing is a field of study, and there is research to inform when, how and why or why not to do it.

Because downsizing has become an area of personal interest, I have gotten to know experts in the field such as Wayne Cascio, author of numerous books and articles on downsizing. According to Cascio, studies have tracked the performance of downsizing firms versus non-downsizing firms for as long as nine years after a downsizing event. The findings revealed: “As a group, the downsizers never outperform the non-downsizers.” Companies that simply reduce headcounts, without changing in other ways, rarely achieve their long-term desired results.

Stable employers do everything in their power to retain their employees. Even during the recession in 2008, when more than 3 million Americans lost their jobs, 81 percent of the top 100 companies in Fortune magazine’s 2009 list of “Best Employers to Work For” had no layoffs. Of these 100 companies, roughly 70 percent are privately owned; they don’t feel pressured by short-term decision-making.

Organizations have cultures that weave people together as a tapestry. When holes are cut into this tapestry, it’s hard for the remaining employees to be as productive, creative, innovative and satisfied.

Costs include the negative impact on relationships with clients, suppliers and customers. These relationships are usually based on trust and take years to develop and energy to maintain. As one senior vice president at IBM Corp. told me, “When the water gets choppy, you don’t cut your motor.” But motors are being cut.

Cascio came up with 10 tough questions to consider before downsizing employees, and leaders would benefit from asking them:

1. Why does downsizing make sense for the organization?

2. What’s the business case for it?

3. What problem is the organization trying to solve?

4. If the problem is short-term cash flow, are there alternative ways to cut costs?

5. Do prospective layoffs include employees with hard-to-find skill sets?

6. How will the downsizing affect high performers who are difficult to replace?

7. What are the short-term payoffs?

8. What long-term threats to strategic success might be associated with downsizing?

9. What long-term costs might the organization incur by implementing employment downsizing?

10. Do the long-term benefits outweigh the short-term costs?

Next week, we’ll talk about the right way to treat employees when downsizing truly is necessary.

Jann Freed is a leadership author, trainer and coach.