Wednesday, May 27, 2009

The (im)morality of layoffs?

Money, not morality, is the principle commerce of civilized nations.

--Thomas Jefferson

In the May 24 New York Times, ethicist Randy Cohen argues that it is unethical for American businesses to engage in mass layoffs:

These days such mass layoffs are sadly unsurprising, but are they ethical?… They are not, at least until more benign tactics have been exhausted….

To deprive thousands of people of their livelihood can have a catastrophic effect on them, their families and their communities. For a company to get through a recession, suffering may be unavoidable, but ethical management means minimizing that hardship, spreading the pain equitably and bearing some responsibility for its consequences….

Before adopting the ethics of the overcrowded lifeboat, before tossing thousands of non-millionaires over the side, gentler — and more equitable — methods must be tried. Everyone’s hours might be reduced, diffusing the pain. Dividends to stockholders can be eliminated. Pay cuts can be instituted company-wide, with the deepest reserved for the highest paid (that is, those most able to endure them).

Mr. Cohen is selling employers short. I work with a lot of companies, many of which have, with much regret, been forced to downsize their workforces in the past few months. I can assure you it is never a decision taken lightly, or without careful deliberation. Certainly, layoffs are an opportunity for employers to shed some dead weight. Many good employees are also impacted, though. Those businesses that can offer economic help to severed employees do so, in varying sized packages. Others have considered alternate plans, such as furloughs, alternate work schedules, or wage reductions.

For some businesses, however, whether because of the need of their operations or the composition of their workforces, layoffs are the only viable option. A paycheck for some is better than a paycheck for none.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or