The Fud Factor, Fear Uncertainty & Doubt. The things you do not need when you are work.
You do not need to see employees getting picked off at random phone call times. You do not need to see the snakey guy that you just don’t get along with, get promoted. You can not live a life of Fear Uncertainty and Doubt.
You can not show up to work every day thinking “oh it’s probably my turn to get voted off of the island”. This is not a proper way to live. It certainly is not a good way to run a business.
Even if you think that you just hired 6 sales men to get the word out that you do a certain type installation, but you only need on e in the long run. It is not justified to hire people and then fire them off as soon as the money comes rolling in. This leaves you employees thinking you are a loose canon without a care about the outcome of your actions. This leaves your employees wondering if the company is having hard times, and if it is probably a good idea to leave while you still have an income, and just transition to a new place. This is a whole lot better than getting called into the dank office on a Wednesday to find out that you have to go job searching today.
You have to communicate with your employees. This will prevent rumors. You have to be just as loyal as you expect your employees to be to you. You can not leave your employees thinking that at any time you will just change your mind, and cause someone some hard times.
Some people react a bit different than others when they are scared. So it is best to be honest, and do not play games with people who are looking to be good employees making good money and providing for themself.
Imagine the employment form that says “tell us why you had to leave your last place of employment” and the potential employee responding with “because the owner of (company name here) Is an immature brat with no sense of business skills decided to hire me and fire me to make a point to his existing employees”.