Ethical Implications Of Layoffs And Downsizing

The business world has been facing a tough and complex market environment in the recent years. As the economy swings down, majority of firms try find themselves is try to cut some costs and increase profit to survive in the market for long-period. One of the easiest ways to cut cost is through reducing staff and layoff jobs. The elimination of jobs will certainly reduce some expenses like salary expenses, payroll costs as well as human resources costs and so on. leading to increase additional funds for any potential investment that the firm could face to upturn profit. Likely firms could use such strategy like reducing staff and facing no legal action or policy violation, which leads to presents many ethical problems between stakeholders and firms (Baston, Blake & Neff, 2007).

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It’s important to understand ethics because it keeps people away from doing what’s wrong. If an individual’s have no ethics, they would do the wrong thing whenever they believe it benefit them as long as they get away. For example, a person will keep stealing as long as no one is watching him. Similar to business ethics, if a business operates in ethical manners, that will indeed increase the value of a business. For example, if a firm follows the code of ethics in every day decision, it will increase expectations of a social community to ward a firm and customers would like to keep trading with a business and that of course will lead to increase sales of goods/services or both. Ethics “is the study of how people try to live their lives according to a standard of right or wrong behaviour-in both how we think and behave toward others and how we could like them to think and behave toward us” (Ghillyer, 2008, p. 51). In most situations ethical choices are clear cut that the person can easily decide what is right or wrong thing to do based on ethical principles. Also try to treat others as we would like to be treated; as its expressed by The Golden Rule “Do unto others as you would have them do unto you” (Ghillyer, 2008, p. 7).

However, people choices could also be challenged when they face situation when two or more moral values are in conflict which its known as Ethical dilemma” A situation in which there is no obvious right or wrong decision, but rather a right or right answer” (Ghillyer, 2008, p. 9). Meaning there is no obvious right or wrong answer, but both right answers. Leaving an equally one right choice undone, others likely to suffer something bad after the choice is made, contradicting a personal ethical principle in making that choice and abandoning an ethical value of a community or society in making that choice (Ghillyer, 2008, p. 9). As it is shown in the case provided “The Layoff” Alice is facing an ethical dilemma, whether to tell her friend about the Layoff or to stay loyal to her boss and the company. This essay will domnstright the ethical dilemma that Alice is facing, following the process for making moral decision and relevant ethical theories.

In the “Layoff” Case study; Alice is facing an Ethical Dilemma because they are two moral values in conflict. The two values are “telling the truth” or “stay loyal”. Here in this situation, if Alice tells the truth to her friend, it would mean that she’s being disloyal to her boss and to the company that has treated her so well for such long time, but at the same time she still loyal to her friend by informing him about the layoff before purchasing the house leading to have financial problems on the future. Or on the other hand, if Alice won’t tell her friend about the Layoff and know that her friend will purchase a house, it would mean that she still loyal to her boss and the company. Alice must weigh the loyalty to her friend against the loyalty her boss and the company to make her decision.

There is no guidance or direct way to solve an ethical dilemma and making the right ethical decision, like the situation Alice is facing. However what Alice needs to do for solving her dilemma is to take some real step as guideline for evaluating and determining the ethical decision. That decision must be logical, based on facts and should be accepted by moral principles. In other words, if moral decision or conclusion is defensible, then it must be supported by defensible moral principles, together with relevant facts. (Shaw et al, 2009, p.28).

First step in moral decision making is to determine the facts of the situation. It’s important to gather facts and information before jumping to conclusion. Alice should gather as much information that will help her relating to her dilemma. For example, she may find out what’s the company legal requirement on informing workers about Layoff. Also she may gather enough information to determine how long it would take these 200 workers to find new jobs. Second step is to identify the ethical issues involved. It’s important that, Alice shouldn’t jump to conclusion before identifying the ethical issues that related to her dilemma. In this case, one professional ethical issue has to do with rights of both the workers and the company. Alice should define the workers legal right to know about the plant closing in advance. The other ethical issue has to deal with company’s right to keep the information private. Furthermore, Alice must determine the obligation for her company toward its workers in this regard. At more personal level, there are the ethical issues related to principles such as honesty, loyalty and promise keeping.

In the context of ethical decision making, the next step is to identifying all stakeholders “all of those individuals or groups, who have a stake in the particular decision or action” (Trevino & Nelson, 2010, p.54). Alice should identify the stakeholders that will be affected by her decision before jumping to conclusion, and how they are been affected. First Alice should consider the stakeholders that will be affected immediately by closing down the plant for example, Alice, the workers and Alice’s boss. Then she should consider on large scale for example, local community and social responsibility. Imagine if the plant is located in small town; fairness to the entire community becomes an important ethical issue. Shouldn’t the community have as much time as possible to plan for the impact for shutting down the plant?

After identify all stakeholders, the following step is to compare and weigh the alternative theory. Here we will use to two theories, consequentialist and Non- consequentialist theory. The consequentialist theory focuses on the result of the decision or action and it’s divided into Egoism and Utilitarianism (Shaw et al, 2009, p.58).

To keep the Layoff information completely from the affected workers would fall under Ethical Egoism approach. Egoism “An Act is morally right if and only if, it best promotes an agent’s long-term interests” (Shaw et al, 2009, p.59). Here morality is linked with self-interest, meaning no basic duty to assist others but sometimes by pursuing long-term self-interest actions may be contrary to the person immediate interest, but beneficial in the long-term. For example, Alice won’t tell her friend about closing down the plant because she may be interested in her position in the company for the future, so Alice won’t breach confdality of the company.

Utilitarianism is the second approach in the consequentialist theory “We should always act to produce the greatest possible balance of good over bad for everyone affected by our actions” (Shaw et al, 2009, p.64). Here the ethical decision aiming to maxima’s good and minimise harms. A utilitarian would approach an ethical dilemma by identifying all stakeholders in a particular situation as well as the actions and their consequences (harms and/or benefit) for each. Here in this case, if Alice tells her friend about the layoff, her friend and other workers might be benefit by getting informed about the situation earlier, especially, one of the workers is purchasing a house in a following week. On the other hand, if Alice won’t tell the workers about the layoff to protect her company by keeping information’s to herself. Alice and her family will be benefited first by keeping her job because she is still loyal to her company; also the company is benefited as there is no rumours going around about closing down the plant which indeed it will prevent several future crises.

The Non- consequentialist is different than consequentialist theory. This theory is often formulated in such a way that the rightness of an action consists in its conformity to a moral rule or command. The Non- consequentialist is divided into three approaches: Kant, Duty of care and Virtue ethics. (Shaw et al, 2009, p.58)

Kant “Gives firm’s standards, but doesn’t depend on result. Add a humanistic element into moral decision making” (Shaw et al, 2009, p.71). This theory held that the actual action should be based only on duty and good will, then our actions will result moral judgment regarding the consequence of that action. In this case, if Alice thinks that her duty to her friend is more important than the company, then indeed she will inform her friend about the layoff anyway even if her job in the line. Or the other way around, Alice might consider her duty to protect the company is way too important than inform her friend and the workers bout the layoff.

Duty of care focus on duties rather than consequences “Decisions are made based on what’s right on boar, abstract universal ethical principles or values such as honesty, promise keeping, fairness, loyalty, justice, responsibility, comparison and respect for human beings and property ” (Trevino & Nelson, 2010, p.42). Regarding to this approach, there might be some certain moral values that are binding, regardless of the consequences if the actions or decision are good. Therefore some actions would be considered wrong even if the results of the actions were good. For example, if Alice doesn’t tell her friend about the loyal, it would result positive sign to the company. However it would be wrong action as Alice is not loyally to her friend by keeping the information away.

Virtue ethics focuses more on the quality of the moral actor (the person) rather than the moral act itself (actions taken). Here, the issue is not what’s the right thing to do? Or who’s benefiting the most? The issue here is the person whose acting is considered to be morally good character such as honest, loyalty integrity etc. In this case, Alice decision will be based on here moral character that will make her happy the most. If telling the truth will make Alice happier than being loyal to her company, it means Alice will inform her friend about the layoff regarding what are the consequences later. However if being loyal makes Alice more happy, then she won’t inform her friend about any changes at work even though her friend is purchasing a house next week, because being loyal to her company means her more than telling the truth to her friend.

Finally, the last step in moral decision making is to make a decision. In any ethical dilemma, there is no right or wrong answer but both rights as it mentioned before. However the person who’s making decision must gather all facts, consider all the potincol harm and benefit to all stakeholders that will be affected by the action. Also must determine the ethical value of the person that makes the action.

Thus, no company is immune to problems. The companies that survive are the ones that can spot ethical issues and correct them before they become problems. My advice to Alice to manage the layoff is trying as much as possible to let not spread the rumours around work. Instead Alice should openly discuss the layoff situation between the company and the workers though meetings and try to explain that the company is facing low down in the market and the layoff is their last potion. Alice should convince her company about the social responsibility toward workers by trying to find similar jobs for those who are their job in the line. . As a result, it will attract positive image to the company by handling the layoff in such ethical way