Ethical Issues of Lay Offs - Essay Example

Ethical Issues of Lay Offs Introduction The study of ethics has intrigued the faculties of scholars since early philosophers and ethicists during thetimes of Plato, Socrates, and Aristotle, to name a few. Johnson (1965) defined ethics as “the systematic inquiry into man’s moral behavior with the purpose of discovering the rules that ought to govern human action and the goods that are worth seeking in human life”. These ethical standards governing the existence of human life also encompass the realm of business entities. This essay is written to present ethical issues in business specifically on lay-offs. Conceptual Framework of Lay-offs Lay-offs are defined as “suspension or termination of employment (with or without notice) by the employer or management.” (Business Dictionary 2009) Layoffs are management’s option when faced with situations such as financial difficulties, positions are no longer required, business slow-down, or work interruption. This could be categorized as follows: to save the company, to change, and to improve the company. Regardless of the rationale, layoffs cause undue stress, emotional pain, anguish and suffering for the terminated employees. On the other hand, the managers who are assigned to deliver the blow are also faced with sorrow or guilt, as the case may be. It is in this regard that layoffs are closely evaluated in terms of ethical issues which arise due to the critical consequences that arise. Due to these consequences, layoffs become controversial ethical issues. Velasquez & Rostankowski (1982) averred that “an act with ethical or moral consequences is that such an act involves decisions freely taken that will have positive or negative consequences for others”. Ethical Issues of Lay-offs According to Gilbert (2000), “in some circumstances, laying off some employees is the ethical thing to do, and managers who fail to do so are guilty of unethical conduct. In other circumstances, no ethical defense of layoffs can be found, and managers who decide on layoffs in these circumstances are guilty of unethical acts. In a wide range of circumstances in between, there are ethical arguments for and against layoffs.” To determine the morality of a decision or an action, one approach is that of utilitarianism which holds that a moral decision or action is one that results in the greatest good for the greatest number of people. (ibid.) Using this approach, management justifies that it is common to layoff on the basis that terminating 1000 personnel if this move will save the organization from bankruptcy and hence preserve the jobs of 5000 others. Closely assessing this concept, the greatest good for the greatest number of people would mean “the happiness or pleasure of employment for all those who remain justifies the pain of those laid off and those managers who conduct the termination interviews. Further justification can be found in the happiness of stockholders, bondholders, and others who would be hurt by the companys bankruptcy. Given this situation, the utilitarian approach would clearly condone the layoffs as the moral thing to do.” (ibid.) However, another ethical issue that would emerge under the utilitarian approach is determining the number of personnel to be terminated or laid off to satisfy the greatest number of good parameter. Another approach to examine the issue of morality in layoffs is the concept of rights and duties made famous by Immanuel Kant. According to Gilbert (2000), this approach is better explained, to wit: “the basic position here is that individuals have rights, either as humans, as citizens of a given country or state, or as occupants of a particular position. These right rights confer duties on others, and the morality of a given decision or act can be determined by an analysis of these rights and duties.” The ethical issue in this case arise when employees emphasize that they have rights to their jobs and therefore managers have a duty not to lay them off. Using the rights and duties approach, Gilbert (2000) clearly explained its relevant consequences to personnel who are laid off, as quoted below: “The law in the U.S. as to whether an employer can terminate an employee at will (for any reason or no reason) varies from state to state (Halbert & Ingulli, 1997). Federal law prohibits termination for some reasons (age, gender, disability). In cases where a labor-management contract determines wages and conditions of work, grounds for termination are usually specific and limited. Whatever rights to a job an employee has under such agreements come from the employees membership in a group covered by the negotiated contract. Applying a rights and duties approach to the ethical analysis of layoffs, it appears that the central question is whether an employee has a moral right to his or her job, and whether supervisors then have a corresponding moral duty not to determinate that employee until he or she forfeits that right.” Finally, the approach of justice and fairness come in when situations where it does not seem fair for one to be terminated when performing well and earning both praises and raises have consistently been the case. This approach was closely studied by John Rawls, a professor at Harvard University. Under this system, the ethical issue could be: would it be fair and just if the employees laid off were those with the least seniority or those who, while performing adequately, did not perform as well as others who retain their jobs? From the point of view of the system, seniority or merit present arguably consistent bases for deciding who loses their job and who keeps it. (ibid.) If the goal of the company is to improve its performance, the judgment of which individuals should suffer layoffs (those who contribute least to the companys performance) would appear to the more defensible. Analysis In determining the morality of the decision or action utilizing the three approaches, the goal of the company should first be taken into account. According to Gilbert (2000) the following rationale clearly justifies one approach over the other, to wit: “the extreme case where layoffs are the only way to save a company, the utilitarian approach finds the decision to conduct layoffs to be moral, because the layoffs generate the greatest good for the greatest number. The rights and duties approach sees the action of layoffs in the same situation to be moral because employees do not have absolute rights to their jobs. However, this view also requires that layoffs be conducted in a fair and just manner, because employees do have a right to be treated fairly. Finally, the justice and fairness approach, does not find layoffs to be moral, because they lack proportionality between the individuals behavior (good performance) and the resulting action (termination of employment).” (ibid.) Conclusion Managers who are tasked to decide on who to lay off and how many face ethical issues which should seriously be evaluated in terms of the approaches that define the morality of their decision and action. Works Cited Johnson, O.A. (1965). Ethics: Selections from Classical and Contemporary Writers. Holt, Rinehart and Winston, Inc. New York. Business Dictionary. (2009). Definition of Layoff. Retrieved on July 8, 2009 from < http://www.businessdictionary.com/definition/layoff.html> Gilbert, J.T. (2000). Sorrow and Guilt: An Ethical Analysis of Layoffs. Retrieved on July 8, 2009 from < http://www.allbusiness.com/management/543491-1.html> Valesquez, M., & Rostankowski, (1982). Ethics: Theory and practice. Englewood Cliffs NJ: Prentice-Hall Halbert, T. & Ingulli, E. (1997). Law and ethics in the business environment. Second Edition, Minneapolis/St. Paul: West Publishing. Read More