What Ethical Issues Should a Manager Consider When Downsizing?

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Asking people to leave their jobs is difficult.
Asking people to leave their jobs is difficult. (Image: Jupiterimages/Photos.com/Getty Images)

It's tough to be a manager when a company or organization faces tough economic times. One business solution that might be considered is scaling down the number of employees on the payroll. This solution saves immediately on salaries, benefits and other personnel costs. Before you choose to shrink the payroll by downsizing, consider the ethical issues affecting your decision.

Potential Benefits to Self

A major ethical consideration that you must consider is why you are choosing downsizing as a business solution. For example, consider what you might gain or lose from the decision. Is your job on the line? On one hand, you can argue that the organization will save money by shrinking its workforce, perhaps even outsourcing labor to a cheaper market. If you have something personal to gain from downsizing, you might get other managers to decide if downsizing is the best option.

Potential Effects on Workers

An organizational downsizing has a huge impact on employees' lives. At least temporarily, the income security of each downsized employee and his dependents will be at risk. This disruption of normal subsistence patterns can have far-reaching effects on employee households. A manager must also decide if short-term savings are worth long-term losses in employee knowledge.

Early Notification

A manager must also consider the organization's obligation to notify employees that their positions with the firm might become redundant. This advance notice gives them a chance to avoid unemployment by seeking other employment opportunities before being laid off.

Economic Considerations

Companies also have to consider how downsizing affects local economies where their employees work. Laying off workers can cause economic instability in local areas, regions and even whole countries. In a small town, a factory providing the most jobs that suddenly closes can erode the livelihood of many businesses that exist to serve factory workers and their families.

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