Blog writer quoted in smartmoney.com on cash flow and company lay offs

I was using my Linked-in account and checking out the questions in the "Business Analytics" a few weeks back and it lead to an interview with a reporter for Smartmoney; a Wall Street Journal Publication.
Here's the original question and my answer. A link to the Smartmoney.com article is below as well.

The Question:
What do businesses look at when deciding on the necessity and size of layoffs? Asked by Aleksandra Todorova 11 days ago in Staffing and Recruiting, Business Analytics

My public answer:

The three things that are looked (in various ways).
1. Cash Flow
2. Revenues (going forward)
3. Cost Structure

While businesses may do thorough studies of their cost structure vis-a-vis competitors and conduct market/economic analysis to forecast future growth; it is the rate at which "free cash" is being consumed that drives the timing and size of most lay-offs.

Unlike vendors and creditors, where terms can be negotiated and cash outlays deferred or slowed, payroll is an immediate weekly/bi-weekly drain on the cash needed to operate the business. Often loan covenants directly (revolving AR backed credit) and indirectly (term loans of all types) force a company to cut short-term costs in order to keep the loan out of technical default.

Short-term layoffs are almost always directly proportional to cash flow reductions. Permanent layoffs are often a blend of current cash flow and the estimated shortfall in near future revenue growth.

The staffing required to generate/produce current revenue is usually the most secure in a lay offs as are the people required for basic internal operations.

However, people recently hired of all types are most often let go as well as a percentage of people involved in future sales.

Another special category that is hit in a layoff are "troublesome" people whom a manager has tolerated. Given budget cutbacks, local managers often "clean" house and this is an area for potential HR/ legal problems.

Finally, companies may dump an entire plant, product line or outsource an inefficient/expensive internal function such as telemarketing.
end of my answer

This answer led to a request for an interview and then another follow-up and finally the smartmoney.com article published on March 17th, 2009. http://www.smartmoney.com/Personal-Finance/Employment/Are-Layoffs-Looming-at-Your-Company/?hpadref=1