In recent years corporate downsizing has been on the rise throughout the world.
Downsizing is reducing costs by dismissing employees and reassigning their duties to the employees who remain. They usually call it restructuring, rightsizing, reallocating resources, or job separation. They sometimes use dieting metaphors like "trimming the fat," "getting lean and mean," or "shedding weight." Whatever the euphemism, employees affected by these practices know what the words mean to them: layoff. And no "kinder, gentler" words can do much to alleviate the anxiety and distress that come with losing a job.
In their quest to lower costs to stay competitive, companies often wield the ax with little or no regard for the well-being of the people involved. For example, in the past years AT&T have dismissed thousands of managers and employees through downsizing, though many of these people have twenty or more years of loyal employment with the firm. Industry analysts assert that if organizations wish to consider themselves responsible, ethical corporate citizens, they must demonstrate concern for their employees, even when they have to tell them they are no longer employed.Organizations concerned about easing their employees' shock and stress at being laid off can do so through careful planning and preparation. Effective, honest and timely communication is always important, but when staff reductions are imminent, it becomes critical. Employees who know what is going on can prepare themselves for the inevitable and are much better able to cope when the ax finally does fall.
It is sometimes difficult to determine the right thing to do, but many firms are trying. IBM for instance, offers early retirement. AT&T offers job search help and career counseling to displaced employees. Organizations can also support employees whose positions have been eliminated by providing retraining or outplacement assistance and a reasonable severance package. Those being laid off are not, however, the only ones affected by the downsizing. By addressing the needs and concerns of remaining staff, showing sensitivity to their feeling of loss, and dealing with their anxieties about additional layoffs, an organization increases its chances of retaining their loyalty and trust.
Questions about the ethics of downsizing are sure to continue. Do responsible companies lay people off? Is it ethical to close factories? Must employers guarantee workers jobs for life? What are the ethical issues involved when organizations become so downsized they are no longer able to attain their goals (a situation known as "corporate anorexia")? What happens, for example, to patients in a hospital that has eliminated so many positions it is no longer able to provide the necessary level of care? If, as most experts agree, downsizing is here to stay, perhaps the real question is not, "Is it ethical to downsize?" but "How can companies downsize ethically?"