As summarized in this Strategy + Business Research Brief on a Harvard Business School Working Paper, laying off store employees is a tactic retailers use to cut costs but it’s likely to have a negative impact on the bottom line. The author spent four years studying a national retail firm with more than 260 stores and found a direct link between staffing levels and profitability.

Specifically, the author found that when a store maintained too few employees, which were overworked, conformance quality — which measures how well employees follow specific processes — suffered and this led to higher levels of customer dissatisfaction and lower profitability. More importantly, it only took a slight increase in conformance quality to generate a 4% increase in margins. Considering that some retailers, especially in grocery, operate on razor thin margins that are less than 10%, an improvement in conformance quality alone can result in a 50% to 100% improvement in margins.

So again, one has to ask, given the risks associated with cutting your talent (productivity, morale, quality, revenue, profits, and lawsuits), the benefits of keeping your talent, and the fact that there’s always better savings opportunities to be had with process transformation and strategic supply chain initiatives, is it really worth it?