Clarita Cosmetics Is Confronting a Decline in Sales Due Largely

Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate, the following statements are made. Which of the statements is FALSE?

A) If Clarita Cosmetics lays off a large number of employees, there will be a significant loss of human capital that will cause further downturns in the firm's performance.
B) A moderate-sized layoff at Clarita Cosmetics will probably improve firm performance.
C) If Clarita Cosmetics restructures, it ought to increase investments in training and development.
D) A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.

Correct Answer:

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