Why layoffs are ethical

Many times layoffs are simply the laziest way to improve the bottom line. Rather than find other expenses to cut or, better still, find ways to increase income, unimaginative executives simply start dumping workers until they reach the numbers they want. Both of these explanations for implementing layoffs raise questionable ethics. However, of greater ethical concern is how the layoffs are actually conducted. I remember well the first high-tech layoff I endured back in the mids.

When the dust finally cleared, management had gotten rid of all the "troublemakers. I was too new to be a "troublemaker" during that round of layoffs, but I knew I'd be a candidate for a future round. Robbed of its brightest and best, the company languished for several years before completing the descent from a Fortune company to bankruptcy.

Perhaps the fairest way would be to use seniority, the method promoted by the much-maligned unions. This ensures that employees who have contributed the most to the company receive some consideration for their past efforts.

It also relieves the burden on older workers. The argument against this is that it removes the company's flexibility to make case-by-case choices. Another argument against seniority is that often the longer-term employees make more money.

So cutting their jobs, eliminating their salaries, and having their work done by lower-paid employees can cut salary costs overall. I find this logic to be ethically questionable, because it penalizes the longer-term workers for their years of contribution to the company and resulting financial success. Managers are rarely the ones who make companies successful.

Most often it's the work of long-term employees who have helped build the brand or the product. In a just situation, these employees should have earned some protection from the vagaries of the market. Another related practice I find questionable is looking first in the salary column and then deciding which salaries should be cut without much regard for the name attached to the salary.

It is important to remember that Illinois is an at-will employment state. All employees hold their jobs at the will of the employer, wherever the buck may stop for specific decisions.

Even employees under a union or other contract can be laid off, though with more stringent requirements placed on the employer to make the cuts in an equitable fashion.

Having said that, when an executive makes the decision, there is a values issue at the core. As we know, a business has four sources of capital: financial capital, material capital, technological capital and human capital. When laying off employees, it is useful to determine which motivation is in control. If human capital is the primary driver in a business, then one will do everything possible to retain the knowledge, skills and history of the employees to help face the challenges ahead.

So the ethical stance is to value employee importance and commitment to position the business for survival and growth in economic recovery. The unethical force in business, especially in the financial services industry during the last decade, has been greed.

When Scott herself was in a similar position as the head of Juice Software in the aftermath of the Sept. Eventually, Scott did have to eliminate some jobs at the company. If there are introductions I can make for you, I will do it. That could help lessen the internalized feelings of failure and depression that are so common after layoffs.

Another way to be compassionate, according to Scott: Provide laid-off workers with a way to stay in touch with their teammates. At Juice, she held once-a-month drinks to which both current and laid-off workers were invited.

But organizing an after-work Zoom, a Google Hangout social hour, or a Slack channel that integrates external members could have a similar effect. By providing your email, you agree to the Quartz Privacy Policy. Skip to navigation Skip to content.