Stress And Resignation after Shuffling of employees - how to cope up with this situation?

I am currently working in a mid-level company, where the current scenario is that company is into losses, due to which this year the company did not give the annual increment to the employees.

Due to which many employees have resigned the positions. Just to maintain the balance of the number of employees in each department, my director is shuffling the entire department (i.e. he is transferring a person from ABC dept. to XYZ dept.). Let me specify that this is not promotion of any employee but he is doing this so that the business is not affected and he doesn’t run into any further losses.

The problem here is that the employees are very much stressed and are unable to handle this, due to which the work is getting delayed by each department. And after this transfer the number of resignation has increased. I request you to kindly suggest a solution as to how to cope up with this situation as it is really being very stressful.

Dear Sunanda,
When companies start making losses, management does not leave no stone unturned to reduce the cost. In your case, personnel are transferred from one department to another to utilise or optimise the available manpower. Nevertheless, what matter is maintaining productivity of the department or of organisation itself. Productivity can be maintained only if right persons are given right job. Skill-level or expertise matters lot in handling specific job. If in case in the course of these transfers, if the productivity goes down then it could defeat the very purpose these transfers.
Thanks,
Dinesh Divekar

Dear Sir,
My sincere thanks to you for your time. I will definitely check that the suitable skilled personnel are transferred for the another department who can work on it efficiently so that the productivity of the company is not hampered.
Regards,
Sunanda

It is important to inform employees or take them in confidence before transferring them. The reasons for 'reorganising manpower' have to be communicated during such meeting. Hope you have done this before issuing transfer letter,

Dear Sir,
As you have stated in your reply, we have conducted this meeting before issuing the transfer letter to the employees.
My sincere thanks for your time.
Regards,
Sunanda