Too often business is going badly and companies are leaking money all over the place.  Top management acts hastily and decide to layoff everyone in sight.  No thought is given to performance, legal repercussions, employee relations, branding, budgeting, rehiring, or employees and their personal situations.   

Before companies lean down or close up business, they should analyze their situation and determine how they got there.  There could be one or many reasons.  I've listed some of them here:

• Poor hiring practices
• Low morale
• Tough competitors
• High production or service costs in relation to price
• Too much inventory on hand
• Poor marketing or sales or branding
• Ignoring opportunities
• High debt or poor finance strategies
• Too little training

What happens when management slashes and lays off employees hysterically can create a snowball effect and make a bad situation worse.  For those who aren't fired, morale is low.  Often, the wrong employees are let go, leaving a greener untrained group of employees unable to cope with the carnage.  In this age of social networking and sites like Glassdoor, branding suffers making way for even poorer sales and lower profits.  

With this snowball effect, management will have trouble determining the initial problem or cause and lessons learned will be learned too late.