In late 2001, American airline giant Southwest faced a simple choice.

In the wake of the 9/11 tragedy in New York, the company could either follow their competitors’ lead by laying off a significant percentage of their staff, or put their faith in the market to recover.

Ann Rhoades, vice president of Southwest’s People Department, gave their emphatic answer, “Why would we put our most important competitive asset, people, on the street where they can be snapped up by the competition?”

Within three months the airline had a market capitalisation greater than the rest of the entire US airline industry combined, and seven years later it still has more domestic passengers than any other airline in the world.

Most individuals, and the organisations they work for, inevitably feel an urge to respond to difficult times in the economy by cutting costs wherever possible.

And there is definitely an argument for streamlining when the times get tough – the big four strategy consultancies learned that lesson during the last recession and have never turned back.

But by far the greatest risk in recession is causing irreparable damage to your company through a knee-jerk reaction. Southwest’s competitors made over 80,000 redundancies in the US alone, losing over $7 billion between them in the subsequent six months.

Unsurprisingly, not all of them survived.

The temptation when faced with a vivid glimpse of the business’ bottom line is, like so many other companies, to revert to short-termism in response to an impending recession.

The priority has to be to survive the next 18 months to two years, and that can mean having to react to immediate pressures on the business at the expense of the company’s five or even 10 year plans.

However, if that means having to make people redundant, it is worth bearing in mind the opportunity cost of those savings. Virtually without exception, the companies that perform best when the boom cycles comes around again are those that have managed to hold on to the best people and their market share – often at the expense of short-term profits.

The people you let go cost you the business they could have delivered or brought in throughout the duration if their career. And they also cost your brand the negative word of mouth they generate around your company.

Making the choice to hold on to your best people is a gamble against the bottom line, but if you have confidence in their quality and your product, the odds against should be pretty slim.

At FreshMinds Talent, a recruitment consultancy for high-flyers, we have just had our biggest ever quarter.

We are finding that our clients (who include FTSE-100 companies, top strategy consultancies and a host of innovative start-ups) are generally responding to the credit crunch in one of two ways.

Some are bringing in temporary consultants to help them streamline their processes and provide the analytical support to turnaround their business. The majority, on the other hand, are using the abundance of extraordinary people in the job market at the moment as an ideal opportunity to grow.

They are recruiting for recovery

And in 18 months time, assuming by then the economy has a slightly sunnier outlook, they will reap the rewards of their carefully planned positioning.

In every recession and economic crash, there are examples of how a bullish approach to riding out the tough times can ultimately be the key to success. The dot com crash wiped $5 trillion off the market value of technology companies between March 2000 and October 2002.

The survivors included Amazon.com, who took on board more than six consecutive quarters of negative cumulative profits during the downturn, and eBay, who rode the storm so successfully they were able to purchase PayPal on 14th October 2002 in a move that symbolically spelled the end of the crash.

Along with Southwest Airlines, these companies are a particularly topical reminder of the benefits of moving towards long-term targets during a recession rather than buckling to financial or public pressure to slim down.

It may seem unlikely, but there has never been a better time to consolidate an advantage over your competitors, and picking up the key assets – the people – they let go is the ideal place to start.