With the continuing pressure on business to cut corners, one of the inevitable decisions a leader must make is when to trim the payroll. It is often the last place we look, but it is the area where we can make the most difference to the bottom line.

The process of reducing head-count needs to be objective and compassionate. It needs to consider both the short-term as well as long-term effects on the business. It needs to happen quickly and if multiple people are impacted, it should happen all at once.

Use this guide to help you assess whether it is time to trim for the sake of keeping your business alive.

1. Ask yourself what critical functions are required to keep your business going every day. Do not start by looking at the individual people, but rather what your people DO.

2. Regardless of how you are currently organized, consider the possibility of combining job functions going forward.

3. Analyze closely whether you require multiple layers of management to supervise lower-level functions.

4. If your organization is small, can you keep the people you have, but reduce their hours to 30 per week instead of 40?

5. Once you have objectively looked at what could happen going forward, then create a new organization chart and take the time to develop job descriptions for each box.

6. Last, assess the skills of the people you have working for you and determine which box they might best fit into.

Chances are, if you have done this effectively, you will have identified opportunities to reduce your payroll - perhaps significantly. So now let's turn to the people who will be affected.

1. Determine what type of severance benefits you will provide and work with professionals to prepare the proper paperwork in advance. These may include human resources, legal, and financial experts.

2. Decide when you want to announce the reorganization. There are many schools of thought about doing this on at the end of the week, the beginning of the week, end of day or beginning of day. What matters is you or your other senior managers to meet with the individuals who will be affected and promptly remove them from the premises. The separation paperwork should have a deadline for execution and return to the company in order to qualify for any benefits you may be offering.

3. For the people leaving the company, it is imperative to treat them with dignity and respect. You must also protect company assets and company information. Have a plan to collect computers, blackberries, keys, and any other property. Also, have a specific plan to immediately cut off email, voicemail and other access to company information and communication vehicles. While this may sound harsh, it is both practical and necessary. Make sure people know this is not personally directed toward them, but rather a necessary business practice.

4. As soon as everyone impacted has left the premises, be sure to meet with all remaining personnel. Explain why the decisions were made - not why certain people were chosen - this is not personal; it's business. More important, be sure to reassure them that this was done to keep the business healthy and that you are depending on them and their support going forward. With that sense of team commitment, you expect the company to be healthier and stronger.

5. Under no circumstances should you discuss individuals who have been released. Not only is this a violation of privacy, but it will also be unsettling for those left behind.

These are tough times and these are tough decisions. Often managers are forced to choose people who have been with them for many years simply because they don't have the skills to take the company forward. Remember, the business decision is based on what is good for the future of the business, but you are dramatically impacting people's lives - both those going and those staying.

If you do not lose sight of that personal impact during a company downsizing, chances are you will be successful. Survival now may mean the opportunity to hire some of your best talent back in the future!