Are Layoffs Unethical?



Are Layoffs Unethical?

Introduction

The layoffs can be described as the temporary suspension of the permanent termination of employee from the organization due to business related reasons such as economic downturn or organization restructuring. The term layoff can also be extenuated as the permanent elimination of the particular position from the organization or the dismissal of employees from the organization. It can also be termed as downsizing which has now become increasingly common practice with an attempt to improve the efficiency and the effectiveness of the organization (Baumol et al., 2003). Moreover, it is also said that the employees have no mistake in the layoff practice but the primary reason behind this act of lay off is to reduce or exterminate the financial burden from the shoulders of organization when in case of unprofitable utilization of human resources. There are copious examples where the large scale companies or organizations have gone through the practice of employee layoffs in order to survive in the industry. The greatest examples of layoffs include the Microsoft Corporation, Caterpillar and the Toyota Company.

The study intends to highlight whether the layoffs are ethical or not and it can also be extenuated through the case study analysis of Toyota Company.

Discussion

In the contemporary business world, the act of downsizing, laying off and combining of jobs with the aim of reducing the headcount is more common than ever. However, with the economic downturn, the companies are now found to be actively involved in cutting the costs to accelerate their return on assets so they find it more convenient to increase the return through reducing the workforce which consequently decreases the salary and other incentive related expenses.

Answer # 1

The practice of employee layoffs has become common where the organization terminates the employees regardless of his satisfactory or even exemplary performance. This happens thousands and millions of times intentionally when companies want to reduce the size of their workforce and bring about the changes in the company by layoffs. Companies do not even consider their former employees at the time of decision made to layoff. In order to determine the ethical aspect at times of decisions made by the organization about the laying off an employee or downsizing, there is no overt reasoning has come in front (Joseph, 2000).

The Toyota Company claimed to follow its policy of not laying off the permanent employees whether it kept paying its former and old employees with the full compensation and benefits which amounted around $ 50 in 2008 despite the fact of its halted production. However, due to the severity of condition, the Toyota Company suspended the variable compensations such as incentives, fringe benefits and bonuses to sustain in the market while retaining its loyal and old workforce. The company overall reduced the pay raises which consequently caused in base pay reduction but this sacrifice benefitted the organization and the employees altogether. However, it had to lay off its thousands of temporary workers in 2010 with the shutdown of California plant ...