Are Layoffs Immoral?

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Greetings Leaders!

I recently read Wally Bock’s blog where he commented on Bob Sutton’s blog on a NY Times article written by Randy Cohen titled, “When Layoffs Are Immoral“. The article and the responses were thought povoking to say the least, and I wanted to add another perspective.

Randy Cohen raised some very interesting points that I wanted to discuss individually.

Randy’s comment: Pay cuts can be instituted company-wide, with the deepest reserved for the highest paid (that is, those most able to endure them).

Response: While I make a six figure income, I don’t consider myself rich. My wife decided a long time ago that she wanted to raise our kids and hasn’t worked full time for over 20 years. Yes, it was our decision, no excuses there. But, Randy incorrectly surmises that just because someone makes a good income, that he or she can take a hit more easily than someone who makes less.

People making $100,000 have the same challenges as that of someone making $50,000. We live in a modest house in a high cost area (California), don’t have HD TV or a DVR, don’t own a boat or a second house, don’t have great health insurance, haven’t been on a cruise, don’t smoke, don’t have an IPhone, don’t have a pool, don’t have paid vacation at work, don’t have matching 401K. So although I make what most would consider a “good” income, I still struggle to put aside enough money to have some fun and provide for our retirement. According to Randy’s definition, I can more easily absorb a pay cut than someone making $50,000. While his logic holds true for the super rich, the majority of people at a company are all in the same boat. To make the blanket claim that someone making more money can more easily absorb the hit – just doesn’t hold up in most cases.

Conclusion: Everyone has different circumstances, and I don’t think it wise to base pay cut decisions on a broad assumption.

Randy’s comment: Although the law limits the duties employers have to employees, ethics sets a different standard. Caterpillar’s workers have existed for years — sometimes generations — in profound dependence on the company. (No work, no food.) In accepting and profiting from this relationship, Caterpillar (i.e., its stockholders) incurs moral obligations to those workers.

Response: I understand Randy’s point, but – why are the stockholders morally obligated to help someone take care of themselves in this situation? I understand helping the poor, the needy, the disadvantaged. However, why do the stockholders in Caterpillar have an obligation to take care of its workers in hard times? We forget that the stockholders are basically the same people as those that work at Caterpillar. The stockholders are workers at other companies, investing their money in Caterpillar to earn a return on their investment. These stockholders are retirement funds, counties, cities, other institutions looking for a place to earn income on their hard earned money. People, just like those at Caterpillar.

As employees, people need to understand that they made a choice to work for a certain company or organization and that the company has no obligation to them, except to pay them a fair day’s wage for a fair day’s work.

I believe the layoff itself is neither immoral or moral, but a business decision.

Having said that the layoff itself is not a question of morals, a company is morally obligated to take care of its employees when it has to go through layoffs to survive. This is the reason we need good leaders. Good leaders know that it is their responsibility to do everything they can, to assist those being laid off. Good leaders will look for ways to provide extended benefits and to reduce the pain that layoffs can bring about. Unfortunately, companies going through a layoff, usually have poor leaders, resulting in bad treatment of its employees during a layoff.

We need more good leaders running our companies.

Lead With Honor!
JT

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