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Is Downsizing unethical - Essay Example

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When top management makes the strategic decision to downsize, two ethics-related issues arise. The first concerns the moral obligation of top management to act in the best interest of the firm. The second concerns the legal obligation of the firm not to violate the rights of employees (Hopkins and Hopkins 1999)…
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Is Downsizing unethical
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Download file to see previous pages Insofar as the actions that managers take are in accordance with their moral and legal obligations toward the firm's owners, any decisions resulting from those actions would not necessarily be perceived by them as unethical. Based on this reasoning, decisions made by top management to adopt and implement the downsizing alternative, with the objective of ensuring the financial health of the firm, would be in the best interest of the firm's owners. Subsequently, the ethics of downsizing is not likely to be a conscious consideration as top management formulates downsizing decisions.
According to Kantian theory, employee rights are irreducible - that is, they are not to be abridged arbitrarily. This theory also suggests that employees are legally entitled to free and equal access to any rights guaranteed them by law. Legally, employees are entitled to information (i.e., advance notice) concerning layoffs (Cabot, 1988). The concept of rights suggests that employees have the right to as much information as possible about the organization they work for, their job, possibilities of continued employment, and any other information necessary for job enrichment and development (Werhane, 1985).
In downsizing situations, particularly during the process of communicating to employees aspects of the downsizing that will affect them and their job, violations of this concept often occur. Pompa (1992) suggests that less than full disclosure of information concerning the downsizing represents the most blatant violation of employee rights. He states that "Deontologically, if withholding information constitutes deception which limits employees' informed choice about their work status, then it violates the Kantian imperative to treat others as ends in themselves, not merely as means" (pp. 148-149). With respect to downsizing, the concept of rights would argue that employees have rights that must not be violated during the formulation and implementation of the downsizing alternative. When these rights are denied, employees are likely to perceive that ethical violations have occurred.
Downsizing and the violation of implied contracts
What makes a discussion of the ethical implications of downsizing problematic is that there are (save for situations in which collective bargaining is in force) no explicit contractual, legal, or regulatory violations involved.
Because employment-at-will is the dominant paradigm for workplace relationships in the United States, recourse to specific legal remedies is limited for employees who have experienced downsizing. There is, in short, no statutory or common-law "right" in American jurisprudence to have continuous employment with a particular employer, although workers in statutorily-protected classes (like women, older workers, and African-Americans) may have claims if they can demonstrate that their individual dismissals were due to unlawful bias (Lee, 1995). A discussion of the ethics of downsizing that focuses on contractual claims will therefore necessarily rely on psychological and social contract theory rather than a legal analysis.
In short, the fact that many societal (and for that matter, personal) expectations of employers are neither codified into law nor included in a formalized contract is not necessarily fatal ...Download file to see next pagesRead More
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