It can be cost effective if there is currently no way to fully monetize the full productivity of the team, and the company is trying to survive without lay-offs.
The only issue is that if you have a valuable workforce that has the option to leave instead of desperately needing the job, you need everyone's buy-in, or at least full understanding of the circumstances.
Apparently that hasn't been done, which is incredibly stupid, especially in such a relatively small company, but not uncommon.
A simple alternative would be to let one programmer go, and start hiring again when business picks up. However, once you go down that road, it's a lot harder to rebuild the team again. With that as the alternative, it shouldn't be too hard to sell, at least not in the short term.
The only issue is that if you have a valuable workforce that has the option to leave instead of desperately needing the job, you need everyone's buy-in, or at least full understanding of the circumstances.
Apparently that hasn't been done, which is incredibly stupid, especially in such a relatively small company, but not uncommon.
A simple alternative would be to let one programmer go, and start hiring again when business picks up. However, once you go down that road, it's a lot harder to rebuild the team again. With that as the alternative, it shouldn't be too hard to sell, at least not in the short term.