The financial mess the world finds itself in is affecting the video game industry, even though this 2008 we experienced record sales. Some of the larger publishers have already cut jobs or are planning to trim their staff after failing to meet profit projections. Professionals working at small and large studios alike are finding themselves out of work, many for the first time in their lives. Trying to dodge a layoff can feel like battling Sheeva in Mortal Kombat—eventually she's going to get hold of you, and some serious pain is in store for you if that happens. Unless you enjoy battling a multi-armed mistresses of doom, of course.

So this 2009 we can expect game companies are going to be tightening belts and cutting some staff. Sega has axed 30 people as it tries to streamline its operations and Electronic Arts confirmed it was making "significant" layoffs on Thursday at its Black Box studio in Vancouver as part of a restructuring effort the company hopes will save $120 million.

Just days ago, Microsoft announced it is laying off hundreds of people from its game division, including the wholesale closing of ACES studio, which produced the Flight Simulator franchise. When a company like Microsoft starts announcing such large cuts, you know the economic storm is worsening, and you may be in for a rough landing.

In lieu of implementing layoffs however, many game companies can learn from what other companies like Dell Computer, Cisco Systems and Motorola are doing – finding alternatives to layoffs. Layoffs are done to save money. Unfortunately, they are usually a short-term fix, detrimental to the company. So why do so many companies persist in using layoffs as a first choice for cutting costs, and what are some of the alternatives?

A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor. If the basket of complimentary bagels has suddenly disappeared from your office kitchen, now you know why.

Companies trimming their work forces say they do not want to prune too much, as specialized talent, especially in the game industry, is hard to find. I mean, really, how many people do YOU know who are experts at shading, right? The new strategy is ensuring they hire or maintain highly productive workers. No longer is it easy for a 'slacker' to remain on the payroll. If you've got that bagel in hand, now would be a good time to put it away and get back to work!

But we should ask ourselves, why is it that in a tough economy, employers primarily use layoffs to cut labor costs? Why don't they look for alternatives? By alternatives, I am referring to labor cost-cutting measures that allow employees to keep their jobs while lowering their costs of employment.

What else could employers do to cut labor costs and keep employees on the job? Before deciding that a layoff is necessary, consider whether or not there are any alternatives to a layoff that could work in your operation. However, keep in mind, when your company is facing such a dire situation, layoffs might be part of the solution.

Jeff Anderson, CEO of PlayHard Sports, says layoffs are generally the result of insufficient upfront planning. "When you're at the point to make layoffs, you haven't grasped the fundamental problems," he says. "It's sort of like a hurricane. When it occurs, you have to deal with it."