Questions
Case Study: There has been dismal growth in the industrial sector in the last one year owing to various global factors like economic recession/ slowdown in some of the developed countries. You are working as HR head in an IT Company which has also undertaken a slew of measures to tread through the rough phase of economic slowdown which include introduction of new technology and streamlining the workforce. A large number of employees in your organization are above fifty years of age and are finding it difficult to adapt to the new working conditions. There is a lack of demand for the services provided by your company in the market and in view of technological rejuvenation the company, you have been told by the management that they have plans to lay off approximately 25% of the employees. After proper training, the employees were subjected to a test, and a list was prepared of those who did not do well in the test and are above fifty years of age. This is essential for the efficiency and survival of the company. You have been given a list of employees who are to be laid off and you have been told to immediately communicate to them the decision of the company to terminate them.
In the above list, there is an employee who has been working in the company for twenty years. He is known for his discipline, integrity and loyalty to the company. His financial situation is not good at present as he applied for a personal loan a few months ago in order to meet the expenses of his ailing father who was hospitalized. He is sole breadwinner of the family and has two dependent daughters. Marriage of one of the daughters is scheduled for next month.
a. What are the ethical issues involved in the above case?
b. As head of the HR department, what ethical dilemma will you face?
c. Do you think that the company’s decision is appropriate? According to you, what should have been the ideal course of action in the given scenario?
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Model Solutions
Case Study: There has been dismal growth in the industrial sector in the last one year owing to various global factors like economic recession/ slowdown in some of the developed countries. You are working as HR head in an IT Company which has also undertaken a slew of measures to tread through the rough phase of economic slowdown which include introduction of new technology and streamlining the workforce. A large number of employees in your organization are above fifty years of age and are finding it difficult to adapt to the new working conditions. There is a lack of demand for the services provided by your company in the market and in view of technological rejuvenation the company, you have been told by the management that they have plans to lay off approximately 25% of the employees. After proper training, the employees were subjected to a test, and a list was prepared of those who did not do well in the test and are above fifty years of age. This is essential for the efficiency and survival of the company. You have been given a list of employees who are to be laid off and you have been told to immediately communicate to them the decision of the company to terminate them.
In the above list, there is an employee who has been working in the company for twenty years. He is known for his discipline, integrity and loyalty to the company. His financial situation is not good at present as he applied for a personal loan a few months ago in order to meet the expenses of his ailing father who was hospitalized. He is sole breadwinner of the family and has two dependent daughters. Marriage of one of the daughters is scheduled for next month.
a. What are the ethical issues involved in the above case?
b. As head of the HR department, what ethical dilemma will you face?
c. Do you think that the company’s decision is appropriate? According to you, what should have been the ideal course of action in the given scenario?
Model structure
Introduction:
- The above case presents a conflict of duty and compassion for conscientious individuals and companies.
Main Body:
- The case involves the following ethical issues:
- Duty vs compassion: The professional duty to terminate an employee is in conflict with compassion and empathy for the employee’s vulnerabilities and needs.
- Technology vs manpower: Technology intended for the ease of humans is causing suffering for many.
- Business ethics: Prejudices about age, power-imbalance between capital and labour, and unconscientious business decisions are some of the critical concerns in the given case.
- Trust and loyalty vs. profits: Loyal employees will lose trust in their employer which will harm the company in the long run.
- The ethical dilemma faced by me as head of the HR department due to conflict between professional values of accountability to my seniors and values like empathy and compassion towards the employees.
- As HR Head, I am bound to follow the order of management to terminate the services of the employee.
- But I also know that the financial condition of the employee is not good and termination of service will affect him negatively.
- My professional interest also lies in evaluating the effect of such a decision on the employer-employee relation in the company.
- The employee is known for discipline, integrity and loyalty and terminating his livelihood.
- Such a decision might stoke dissatisfaction among other employees and the company might find it hard to retain good talent.
- As HR Head, I am bound to follow the order of management to terminate the services of the employee.
- The company’s decision can be evaluated from different ethical perspectives such as:
- Utilitarian perspective: Drastic measures such as downsizing the workforce are sometimes necessary to make a business efficient.
- Reciprocity of loyalty: Sudden termination of his job would disregard his contribution to the company’s success over the years.
- Ethics of Care: Terminating the services of the employee at a time when he is going through a financial crisis and the economic recession in the market will make it difficult for him to find a job elsewhere, is unethical.
- Recommended course of action include:
- Deduct remuneration of the higher executives till economic slowdown subsides.
- This would help the lower executives retain their jobs without burdening the organization’s finances.
- Technology transition is a slow process for older employees than the younger ones and this should not be the only criteria of firing.
- Attempts should be made to reskill employees or to accommodate them as per their skills rather than to abandon them.
- A choice to work at reduced pay for some time, say one year, with a re-evaluation schedule should be given.
- This will give employees the opportunity to upgrade their skills and will also give them buffer time to explore other employment options.
- Notice period of 3 months and adequate one-time compensation should be given before layoff.
- Deduct remuneration of the higher executives till economic slowdown subsides.
Conclusion:
- Compassionate capitalism is more important during tough times than the good times. It creates social legitimacy for businesses.
- This is also directly related to the company’s productivity as a conscientious firm will attract more loyal and productive employees, eventually benefitting the firm in the long run.