Lay off - Is this the only answer

Now days every company has started laying off employees to cut cost and turn around . Be it software companies or automobile giants . Lets us ponder why such things happens when going is great these companies starts hiring people in large numbers without checking whether they require this kind of large people or not . When things goes wrong then these same companies starts laying off people without any second thought .

This process of hiring people and then firing people in short notice has huge pyschological impact on the person affected .

Steps has to be taken by individual as well as companies to make exit process less painfull .

Companies
They should give persons a reasonable time to seek other employment .
Ask employee to gives services from outside on contractual basis
Explain employee reasons for the exit .
Transfer people to other subsdiary if the company is large.

Employee
Always be alert on the business scenario .
Keep channels for second source of income
Spouse can take the burden for some period .
Networking works in such circumstances .Be in touch with old employers and friends .
Check crendentials of companies before joining .

Laying off could be checked if it is made mandatory of companies get governement or legal approval before going for such action.