Question

Suppose you are a manager who is faced with having to reduce headcount (layoff one of your two employees) in your unit. Sales within the company have declined due to the downward spiral of the economy each department within the organization is faced with making the same decision. Fortunately, you only have to cut one job; others are reducing more.

Diane is in her mid-20s, single, college graduate, she is very hard working and was in the top 10% of the performance ratings this year, she constantly volunteers to travel, work weekends and evenings. However, she supports political causes that could be viewed as contrary to the goals of the company.

Susan is in her mid-40s, has two young children, her husband is a doctor, her performance is good, and she has above average performance reviews. However, she has limited availability on weekends and limitations overnight travel due to her volunteer work with local charities.

• As a manager who would you select to layoff and why?
• What other factors can be used to decide who gets laid off in organizations?
• How should an organization choose between a decision that is legal and in the best financial interests of the organization, but which could be viewed as unethical?

Answer 1

• Based on the information given in the case, I would select Susan to lay off. The decision will simply be taken on the basis of performance by the employees. The case shows Diane is the top 10% of performers in the firm. She also goes the extra mile to complete the given task. While this might change over the period, there is no evidence given in the case to suggest that it will happen soon. Every firm supports members who volunteer at charities and help out others during need. But they can also be ruthless while decision making in terms of laying off the staff. The only bottom line leaders of the firm consider are the performance of employees during the given time period. The case shows Diane has an upper hand in this regard and so I would select Susan to be laid off.
• Laying off employees is a significant decision taken by a firm. While it may seem easy decision making, many factors and parameters need to be considered before finalizing the group to be laid off. Apart from the performance of the employee, there are other factors too that can be considered by firms during layoff decision making. Some of the major parameters to be considered are:
  • Whether the employee has multiple competencies
  • Continuous learning and improvement of employee
  • Contribution to the firm
  • Efficiency and productivity while doing tasks
  • Financial and knowledge impact due to lay off

Employees possessing multiple skillsets can be used in different roles and this gives leaders and option to choose an alternative area if there is ever need of forced lay off. No firm likes to layoff employees forcefully. If the employer has to choose between members possessing one skill or multiple skills, there is a higher probability of employees with higher skillset staying in the firm. Another parameter that firms often consider is the contribution the employee gives to the organization. This can be in terms of leadership, creativity or subject expertise in a given area. These are a few parameters that firms often consider in addition to the performance of employee during lay off.

• Leaders of the firm need to make hard decisions every day. Very often they are forced to choose between options that are ethical in nature or financially beneficial to the firm. There are many firms that give a high focus on ethical approach and following the principles laid down. They are firms that do not allow financial incentives to drive decision making. But there are firms that do not have much higher standards of ethics and do not follow any ethical approach. In such cases, they do not place importance on ethics and take decisions that are financially beneficial. While taking decisions that are financially beneficial but not ethical, leaders often prepare themselves to face retaliation from employees and the community. These decisions are often taken only after careful consideration is given to the financial benefits. Unless the financial benefits outweigh the cons in the decision, leaders do not prefer taking such a decision. Decisions such as supporting a cause that is unpopular, entering into a partnership with a firm that is not considered ethical or laying off employees fall into these categories. The leaders take such decisions only after being fully convinced that the decision taken is in the best interest of the firm.