• Ins and outs of laying off employees number one. Ins: employees are expensive. Not only are you paying their salary, you're also paying for their insurance, INCLUDING unemployment insurance. The fewer employees you have (assuming that those select employees can get the job done), the more money you'll save. Yes, it's hard, very hard, to think of a human being in only monetary terms. Nobody wants to look at Fred or Sally and think: "Hm, I bet I could save a buck or two there by giving them the axe." But reality is reality.
• Ins and outs of laying off employees number two. Ins: sometimes a smaller workplace means a more effective workplace. What do I mean by that? What do I mean, exactly, by "more effective," and how can fewer employees possibly mean a higher rate of effectiveness? Good questions, all. Consider this. When you've got a lot of people together, the tendency is to chatter more, right? It's a basic human instinct to make friends, to get to know them intimately, to converse with them, and so forth. It's also a basic instinct to make enemies and to gossip about them and play tricks on them and so forth. The smaller your work force, the less you have people making friends or enemies and thus wasting time. ALSO: a smaller workforce is a more accountable one. Again, what do I mean? Think about it: if you've got to manage fifty complicated employees, keep track of their actions, rate their performances, deal with Human Resources, etc., you're going to have quite a bit on your mind and aren't going to be able to pay attention to detail as much as you'd like to. Your fifty employees know this, and chances are that some of them will take advantage of it. On the other hand, if you're only dealing with ten employees you're able to keep an eagle eye on all proceedings.
• Ins and outs of laying off employees number three. Outs: laying off employees is fraught with peril. A lot of businesses are being sued these days by laid-off employees. Oh, you may have done the business very circumspectly, followed all proper procedures, you may have done it kindly, humanely, etc.; still, you're talking about people who suddenly have no income and who are willing to do A LOT to pad their bank account. Having to deal with law suits is definitely an out of laying off employees.
• Ins and outs of laying off employees number four. Out: it can have a terrible effect on morale. Your other employees start thinking, "Oh, what if I'm next!" Rumors circulate. People become suspicious of you, you're seen as the enemy. You're seen as the guy or gal who's willing to ruin a life to save a buck. You're seen as the guy or gal with an axe raised over their head, indiscriminately chopping right and left and reveling in the carnage. After all, the person who you've fired is most likely friends with at least some of your other employees. And no one wants to see something terrible happen to a friend.

There are, of course, continued ins and outs to laying off employees, including a slowed down work process (i.e. less productivity) but on the other hand more overhead with which to reward the remaining employees etc. If you put your mind to it, you can come up with all sorts of pros and cons to laying off employees. Use your head and your heart and you'll find a nice balance when it comes to the pros and cons of laying off employees. The pros and cons of laying off employees may be a difficult subject to contemplate, but it must be done. After all, you've got to think of what would happen to your employees should your business go under due to too many employees and not enough profit.