Decisions to fight recession may cause long-term damage.

• Position: STRATEGY

Many recession-fighting actions taken by companies in the past few years, while helpful in the short term, may cause long-term damage within companies. Of the many actions taken, the one that has had the greatest negative impact on employees was cutting services to internal and external customers, finds a study conducted by Metrus Group and Quality Progress, the publication of the American Society of Quality.

The study of 2,100 United States companies found that such cuts had a serious impact on the three core "people equity" factors of employee alignment, engagement and capibilities to meet customer expectations.

William A. Schiemann, coauthor of the study and chief executive of Metrus Group, says of the results, "It's a significant finding, given the empirical evidence from this and other studies that alignment, engagement and capabilities link directly to bottom-line performance." To move beyond the recession, he says, senior executives must rethink their tactics, and especially those that impact internal and external customer service.

Analysis of the findings revealed several surprises:

* The most damaging strategy was not layoffs. While traumatic, respondents said they had only moderate negative impact on the three core factors.

* Pay cuts, pay...