If you think revenues are about to decline it is rational to reduce work force before that happens. The point of a for-profit company is to maximize profits (publicly traded companies are legally required to do this and can be sued by shareholders if they don't, privately held companies have a littl emore freedom, but most are still out to maximize profits.) In order to do this you need a work force sufficient for your current and anticipated future needs.
If your anticipated future needs fall over the long haul, you not only can but should slice down to precisely what you need for the orders you currently have. This does not apply so much to short term dips because the cost of hiring and training new employees is high, but if you believe that you are in for a long term decline then it is not panic, but rational to cut as soon as you have that beleif.
If you think revenues are about to decline it is rational to reduce work force before that happens. The point of a for-profit company is to maximize profits (publicly traded companies are legally required to do this and can be sued by shareholders if they don't, privately held companies have a littl emore freedom, but most are still out to maximize profits.) In order to do this you need a work force sufficient for your current and anticipated future needs.
If your anticipated future needs fall over the long haul, you not only can but should slice down to precisely what you need for the orders you currently have. This does not apply so much to short term dips because the cost of hiring and training new employees is high, but if you believe that you are in for a long term decline then it is not panic, but rational to cut as soon as you have that beleif.