Company XYZ is a leading manufacturer of medical equipment. Recently, the company has been facing financial difficulties due to rising costs and reduced sales. The management team has decided to cut costs by laying off employees to maintain profitability.

The CEO has tasked the HR department to identify employees who can be laid off. However, the HR department believes that laying off employees would be counterproductive in the long term as it may negatively impact employee morale and productivity. They suggest alternative cost-cutting measures, such as reducing employee benefits, to avoid layoffs. How would you apply critical thinking to provide advice to the company in this situation?