"The temptation to overemphasize downsizing and cost-cutting measures for profit growth can lead into a trap," says Pat Graham, vice president of A.T. Kearney Inc. (Chicago). "While this approach may generate necessary and respectable shareholder returns in the short term, overreliance on cost containment at the expense of growth hinders a company's ability to produce high levels of long-term shareholder value."

Rather than pulling back during downturns, Graham believes smart companies should continue to invest in people, R&D innovation and geographic expansion. That strategy prepares them for the future and places them ahead of companies that must play catch-up when the downturn has passed.

There are companies that have resisted the temptation to downsize, and opted instead to protect the substantial investments they have made in finding and training workers. Writing in The Wall Street Journal recently, Clare Ansberry reports on the experiences of several small manufacturers in southwestern Pennsylvania that have been understaffed in recent years, have invested heavily in recruiting and training, and in some cases are recruiting additional workers.

Indeed, Manpower Inc. (Milwaukee) says 60 percent of southwestern Pennsylvania's durable goods manufacturers plan to add workers during the third quarter. This is in contrast with the general outlook in the firm's Employment Outlook Survey for the third quarter, which says the slowdown in hiring will continue generally throughout the nation, as companies across all industries act cautiously in taking on more people.

The companies Ansberry cites have followed Graham's advice, protecting the talent they will need when the economy strengthens. I hope yours is another that will save its workforce.