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Downsizing and Ethics-Ethical Downsizing

Job Articles by Outplacement Coach Joel Garfinkle


No matter how you go about it, downsizing is hard. It's hard on the managers who are forced to make tough decisions and deliver bad news, it's hard on the human resources personnel who must provide support for the exiting employees and motivation for those who stay, and of course, it's hard on the employees who have lost their jobs after years of working for the same company. But as hard as downsizing is, treating your employees ethically during layoffs will make the whole process a little bit easier for everyone involved.

Ethical treatment of workers during layoffs is more than just avoiding discrimination lawsuits, although that is certainly part of it. It's about treating your employees—both those who leave and those who stay behind—the way you would want to be treated. When you apply the golden rule to downsizing, you can do what needs to be done without making it any harder on the affected individuals than it needs to be. That's downsizing the right way.

Ethical downsizing means treating employees both fairly and respectfully. Here are seven ways to inject downsizing ethics into your layoff process.

  1. Don't discriminate.
    It goes without saying, right? But that doesn't mean it doesn't happen. If 90% of your employees are men and 30% of the employees you lay off are women, you'd better have a good reason for the disparity. The same goes for minorities or any other protected class. If you disproportionately lay off a specific class of people, you are asking for a lawsuit. Make sure the criteria you use to determine which employees will be laid off do not unfairly target any one group of people.
  2. Consider alternatives.
    Do you really have to lay off employees to remain profitable? What other options can you consider? How about cutting the number of hours each employee works or reducing salaries and wages across the board? These solutions can cut costs while demonstrating to your employees that you are making an effort to keep them employed—especially if they see that the cuts affect everyone, high-level executives included.
  3. Do your homework before downsizing.
    Decisions about which employees to lay off should never be made arbitrarily. John C. Scott of APT Inc., which offers consulting services for human resource professionals, recommends that you conduct job analyses to determine the skills and abilities required for each position and develop a process for measuring the skills that employees possess against those that are required for the position. Having a solid system in place for evaluating employees can help to disprove discrimination claims by disgruntled employees.
  4. Provide assistance.
    Anything you can do to help your exiting employees get back on their feet faster will soften the blow. If you can, provide a severance package that includes resume and outplacement services, and offer to provide references and letters of recommendation when appropriate.
  5. Treat employees with respect.
    Give your employees the bad news in person and in private. Do it in an enclosed office where the conversation cannot be overheard by nosy co-workers. Don't rush this meeting; allow the laid off employee time to process what is happening. Laid off employees should not be escorted off the property like criminals. A good boss will allow laid off employees time to clean out their desks and say goodbye to their co-workers without a security guard hovering over them.
  6. Speak up on behalf of your employees.
    If you feel that the layoffs are being conducted in an unethical manner, speak up. If you see unethical behavior and don't do anything about it, you are just as guilty as the perpetrator. Speaking up about unethical treatment of employees is not an easy thing to do, but if you don't stand up for your employees, who will?
  7. Distribute work fairly among surviving employees.
    Surviving a layoff can be a mixed blessing. Sure, these employees still have jobs, but who is going to do the work of the laid off employees? Too often, this extra work falls on the employees who are left behind, and they become burned out as a result. These overburdened and burned out employees will bolt as soon as better job opportunities become available. Work with the employees who are left behind to reduce their workloads by putting off low-priority projects and finding ways to streamline the work that is left. This is a good time to think about solutions that will increase workers' efficiency without making them work longer and harder.

When you downsize ethically, you treat your exiting employees with the same level of respect that you gave them when they were interviewing for the job. Consider their feelings and try to make this transition less painful for them. After all, they have not only lost their source of income, but quite likely most of their friends as well. Remember that losing a job is one of the most stressful events that a person can experience and try to put yourself in their shoes so you can help make their transition to a new job as smooth as possible.

Click to view our 9-step outplacement process and see how Garfinkle Outplacement Services can help your exiting employees find new jobs that are perfectly suited to their skills and personalities.