Ethical issues when downsizing

While it is clear that top management is taking a lion's share of the corporate wealth, it is particularly disturbing when it does not take responsibility for its actions. When corporate profits suffer because top management misjudged the marketplace, ignored the competition or failed to develop new market and products, it is not top management that is accountable.

It is the workers who are ''downsized. And the argument can always be made that the company's health must come first, that the welfare of the community and those who keep their jobs should come before that of the individual.

However, something is terribly wrong with rewarding CEOs for their mistakes and, instead, punishing thousands of working men and women. Employees should not be downsized for decisions they did not make. It demonstrates a clear lack of accountability in American corporations and is simply unethical. It is equally unethical and immoral to lay off workers with only weeks or a month of severance pay, and expect them to land on their feet - especially when they have been paid at a level that has made it impossible for them to save, and especially when they live in a region where it can take months or years to find an equivalent salary and job.

Companies that conduct wholesale firings should stand by employees for a modest period of time, offering truly beneficial job training programs, placement and financial assistance. While legislation may be required to correct this situation and I am no proponent of excessive regulation , I am also concerned that our corporate leaders see nothing wrong with earning times more than their workers, see nothing wrong with reaping million of dollars in profit from massive layoffs, and see nothing wrong with punishing employees for management's poor decisions.

As a college president, I am concerned about tomorrow's corporate leaders. I must ask if today's institutions of higher education are failing to provide students with a true moral and ethical education. I must ask if our business schools and liberal arts institutions are spending too much time on solving strategic problems and not enough time on teaching right and wrong.

I must ask if ethical considerations must be subservient to issues of profit and efficiency. At Muhlenberg College, we have tried to make sure our liberal arts education has an ethical and moral underpinning, and we have created a Center for Ethics to explore moral and ethical issues.

As we teach our students critical and imaginative thinking, as well as the knowledge and skills they need to succeed in business and other walks of life, we are teaching them how to make ethical and moral decisions. So, 20 years from now, when these students are in leadership positions at American corporations, I hope the decisions they make are ethical ones. Subscribe Now. Register with JOC.

Cutting costs, reorganize the business and seeking additional financing are possible financial options in lieu of downsizing.

At some point, however, a decision to downsize may be the ethical move because it protects the business and the remaining employees from failure. Consider ethical factors in the way you communicate a downsizing decision.

First, respect the individual privacy of the employees being laid off and talk with each in private. A personal approach, especially in a small business, is also more respectful than bringing in an outside consultant or layoff expert. Explaining the honest motives of the layoff and conveying general appreciation to the employee may help soften the blow.

In some states, companies are legally required to offer a few weeks of severance during massive layoffs. Check with your state department of labor to find out. Regardless, communities and employees often feel you have an ethical obligation to provide some compensation and ongoing benefits coverage to help an employee after a layoff.

Employees selected for layoff should be identified on the basis of the articulated goals for work force reduction, whenever possible. When this is not clear, the tough decisions can be based on a variety of factors: "across-the-board" reductions; employee abilities, qualifications, and performance; diversity goals; seniority; or multiple criteria.

It is also important to respect human dignity in the layoff process. Affected employees should be informed in advance and given an honest explanation for the layoff.