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Informing Employees About Layoffs

Added06/15/1992

Updated07/21/2010

Author(s) Michael Pritchard
Authoring Institution Center for the Study of Ethics in Society at Western Michigan University
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Contributor(s) Michael Pritchard
Notes Case study originally published in “Teaching Engineering Ethics: A Case Study Approach” by Michael Pritchard. Center for the Study of Ethics in Society, Western Michigan University, 1992.
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Authoring Institution (obsolete) Center for the Study of Ethics in Society, Western Michigan University
Rights For more information on permissions to use this material please see: http://onlineethics.org/permissions.aspx
Year 1992
Publisher National Academy of Engineering, Online Ethics Center
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  • Posted 12 years and 10 months ago

    One of the hardest parts of any manager's job is laying off
    or firing employees. In this case, Arnold Raskin,
    Vice-President of Manufacturing, faced this difficulty by
    delegating this task to Tony Furillo. At first glance, it would
    be easy to blame Arnold for the resulting problems because he
    would not accept the responsibility himself. On the other hand,
    Tony is in close contact with the employees he supervises and,
    although it is never easy to be laid off, the message might
    have been a bit easier to handle coming from someone the
    employees knew will. Nevertheless, Arnold gave Tony the
    assignment, but Tony declined to carry out his task on the day
    before Christmas.



    Tony delayed a difficult task. Because of this delay, an
    employee learned of the layoffs in an inappropriate manner
    (during a church service) and another employee placed a $500.00
    nonrefundable deposit on a trip that she may not be able to
    afford. Tony did not want to be a Scrooge. His seemingly
    charitable act, however, resulted in a great deal of
    unhappiness--perhaps in more unhappiness that would have
    happened if he announced the layoffs on Christmas eve.



    Tony bases his decision on the golden rule. He claims that
    "if it were me, I sure wouldn't want my Christmas spoiled." He
    is reasoning that he should do unto others as he would have
    them do unto him. He does not think he would want someone to
    spoil his Christmas, so he does not inform any of the employees
    of the layoffs. Of course, the assumption here is that having a
    happy Christmas is the most important thing to be considered in
    this situation. He never thinks past Christmas to consider how
    this situation will affect the rest of the employees' lives. He
    assumes that letting them have one happy day will somehow
    ameliorate the terrible news they will receive after
    Christmas.



    This type of reasoning is very paternalistic. Tony assumes
    that he knows what is best for his employees. He thinks that he
    would want an unspoiled Christmas, so he projects this wish
    onto his employees. He does not consider that they may hear the
    information in other ways or that they may make financial
    decisions based on the assumption that their jobs are secure.
    Of course, we can all sympathize with someone who has to tell
    his employees on the day before Christmas that they are being
    laid off, but Tony cannot assume that the news will be any
    easier to take after Christmas.



    Although Tony had a variety of what he thought were
    charitable reasons for his actions, his behavior was, in fact,
    lying. Sissela Bok provides an excellent analysis of this
    phenomenon in her book, Lying: Moral Choice in Public and
    Private Life. Bok reminds us that lying may harm the people
    being lied to, but it can also harm the liar. In this case,
    Tony is clearly harmed by withholding information about the
    layoffs (his lie). Not only is Arnold angry with him, but Tony
    must also face the workers after Christmas. It will be
    especially difficult to face them since at least one of them
    already knows the situation. In addition, one of them is likely
    to hold him responsible for her decision to book a vacation and
    the potential loss of money that could result if she cannot
    afford it after being laid off. Thus, lying (withholding
    information) harms Tony as well as his employees.



    Tony decided to base his actions on an accepted ethical
    principle--the golden rule. The resulting problems in this case
    do not negate this principle. The problem in this situation is
    that Tony made his decision without considering the full
    ramifications of the situation. The situation is not as simple
    as ruining Christmas versus not ruining Christmas. Many other
    factors need to be considered. For example, would Tony have
    wanted to learn about his layoff in a casual conversation at
    church on Christmas eve? Would he have liked to have decided to
    spend a considerable amount of money without knowing that he
    would be laid off? The golden rule is an ethical principle that
    can be effectively applied only if we truly know the full
    meaning of the situation to ourselves and to others.

  • Posted 12 years and 10 months ago

    Let us first consider the issues confronting Tony in part I
    of the case. Tony does make a compelling case about not wanting
    to be a Scrooge and ruin the Christmas holidays for his
    workers. Having personally been in somewhat similar
    circumstances (on both sides of the issue) earlier in my
    career, I can attest that it is very appealing for many reasons
    to adopt Tony's non-Scrooge stance, if all other things are
    equal. Unfortunately, they rarely are. For example what if one
    of Tony's workers is offered an attractive new employment
    opportunity over the holidays, and, not knowing about the
    impending layoffs, turns it down because he enjoys working for
    Tony so much? Or what if someone else personally purchases an
    expensive new instrument for his own tool chest that will
    enable him to do his job better for Tony? Or what if still
    another worker has signed up for an intensive three day short
    course over the holidays to improve his performance on the job
    for Tony?



    There are many different scenarios that could emerge that
    would make it inconsiderate for Tony not to inform his workers
    immediately of the layoffs. In fact, just about the only
    scenario that would make it considerate is if all of the
    workers do not get involved in any personal or professional
    planning for the future over the holidays; an unlikely event.
    What is involved here is the golden rule or the Kantian respect
    for persons philosophy. Tony, as group leader, has the
    responsibility of thinking through his options, considering all
    of the possible consequences of his actions that he can, and
    then asking just how he himself would want to be treated if he
    were in the place of his workers. This is a tough situation for
    Tony to be in, but presumably he has demonstrated the necessary
    mental toughness for the job or else he would not have been
    promoted into it. Also, taking on these tough responsibilities
    is exactly what he is being paid for as an administrator.



    In phase II of the case a different issue has arisen. Once
    Arnold has his embarrassing chance conversation with Ralph at
    the church Christmas Eve service, Tony now stands indicted of
    not just poor judgement but also insubordination. Depending
    upon Tony's and Arnold's prior relationship, it is entirely
    possible that the angry telephone call from Arnold to Tony on
    Christmas Eve could end in Tony being fired. If Tony decides
    not to be a Scrooge and delay termination notification to his
    15 workers until after Christmas, he must tell Arnold of that
    decision immediately. He cannot blindside Arnold on this since
    there may be other factors that are involved that Arnold did
    not take the time to explain to Tony. For example there may be
    some year-end payroll considerations, or year-end benefit
    commitments that kick in if the workers are still on the
    payroll on January 1st. Aside from the insubordinate nature of
    Tony's action of not doing what Arnold tells him, it is just
    plain disloyal and, when you get down to it, stupid. The
    subsequent event between Arnold and Ralph certainly supports
    the shortsightedness of Tony not telling Arnold that he was
    going to delay his layoff notifications until after
    Christmas.

  • Posted 12 years and 10 months ago

    I



    Tony may be right in judging that others would not want to
    receive the bad news until after Christmas. If so, then
    reciprocity would require that he delay informing the workers.
    Still the company vice-president is insistent that the workers
    be notified as soon as possible, and apparently Tony has not
    given any indication that he objects to doing so. Perhaps it is
    not clear why the layoff notices should go out so soon. Before
    Tony decides not to follow Raskin's directive, he should
    discuss the matter with Raskin, perhaps question why the
    notifications must be given on Christmas Eve, and explain his
    reservations about notifying the workers. Perhaps Raskin would
    react negatively to having his directive questioned and view
    Tony's reluctance to carry it out as insubordination, but it is
    also possible that Raskin has not thought his decision through
    completely and would be grateful for Tony's perspective on the
    matter.



    A very important issue is whether the workers really would
    not want to know that they are being layed off until after
    Christmas. Of course, receiving the bad news now would not
    contribute to their enjoyment of Christmas, but this does not
    mean necessarily that they would not want to know that they are
    being layed off. Knowing as soon as possible would allow them
    to begin looking for other work right away and to plan for
    possible financial hardships ahead. It might also cause them to
    spend less extravagantly in any last-minute Christmas shopping
    in order to prepare with the loss of their main source of
    income. Thus it is entirely possible that the workers not only
    would wish to know of the impending layoffs right away but
    would resent not being informed earlier if Tony were to delay
    notifying them. Determining what the workers would want to know
    and what they would not want to know would be very difficult,
    and Tony would probably be very uncertain that he had judged
    correctly whatever he decided to do.



    Since it is probably the only ethical consideration that is
    relatively unproblematic in this situation, the most important
    consideration is simply the obligation to tell the truth and to
    give people important information affecting their welfare if it
    is available. To withhold such information because people might
    not want to receive it right away would be similar to a
    physician's withholding bad news from a patient about the
    patient's medical condition "for his/her own good". While
    paternalism is not always unjustified, the burden is always on
    one who chooses to act paternalistically to justify doing so.
    In Tony's situation, the special considerations that would
    justify Tony's paternalistically delaying notifying the workers
    that they are being layed off are not terribly apparent.
    Therefore, if further discussion with Raskin reveals no such
    considerations, Tony should go ahead and inform the workers
    this afternoon as directed.



    II



    Tony should respond honestly by giving the reasons why he
    chose to delay notification of the workers. Presumably these
    would include his desire not to spoil the workers' Christmas
    celebrations and his judgment that they would not really want
    to receive the bad news until after Christmas. It is unlikely,
    however, that this explanation would satisfy Arnold, since he
    may feel that if Tony intended not to carry out his request he
    should have let Arnold know so that the sort of embarrassing
    situation that actually occurred could have been avoided.
    Arnold would be justified in criticizing Tony's actions, not
    because Tony has not been blindly obedient to Arnold, but
    rather because Tony apparently did not respect Arnold's opinion
    enough to let him know that he disagreed with it. Perhaps Tony
    knows Arnold well enough to know how he would have reacted if
    Tony had questioned Arnold's decision to notify the workers
    immediately of their layoffs.



    This might excuse Tony's actions if Tony were relatively
    certain that the workers would wish not to know until after
    Christmas that they were being layed off and if he were
    reasonably sure that Arnold would not be receptive to having
    his decision questioned. However, the first of these
    conditions, as has already been noted, apparently does not
    apply to this situation. Therefore, again, we must conclude
    that Tony acted improperly in not informing the workers of the
    layoffs.



    III



    Shirley might react very angrily to learning that Tony
    decided, in violation of Raskin's directive, to delay the
    notifications. She might believe that, in keeping such
    important information from her and the other workers, Tony had
    violated their right to receive any important information
    affecting their welfare that was available to him. By basing
    his decision to delay notification on his assessment of what
    was best for her, he deprived her of the opportunity to make
    that assessment for herself. Perhaps she can sympathize with
    Tony's dilemma and his motives, which appear to be beneficent.
    However, she can justly criticize his judgment in choosing to
    act on the basis of paternalistic motives and not to recognize
    her autonomy and her right to be informed of important
    information affecting her welfare and that of her family.

  • Posted 12 years and 10 months ago

    I



    Under no circumstances should notification of a layoff be
    delayed or withheld. Layoffs are never pleasant. There is no
    gentle way to announce them. The timing their announcement is
    never right. While the layoff will dampen the holiday, waiting
    until the day after Christmas to call the affected employees so
    not to ruin their holiday is absolutely stupid. Consider the
    impact if they learn about the layoff second hand. It's better
    to have a tempered holiday with the knowledge of the layoff
    having been received first hand.



    Tony should contact the affected employees as the
    vice-president instructed and give the bad news personally.
    While he has the whole afternoon to contact them, he should do
    it as quickly as possible since some employees may be leaving
    town and for others the layoff can alter holiday or
    post-holiday plans. Thus, he must make every reasonable effort
    to notify the affected employees, even to the point of tracking
    them down and keeping a log of his contacts. The credibility
    and integrity of the company is at stake. Deliberately
    witholding the information for any reason can violate a
    collective bargaining agreement, cause an unfair labor practice
    complaint to be filed, or result in legal action against the
    company.



    II



    Well, Tony decides not to be a Scrooge and spoil Christmas.
    So, he plans to wait until the day after to tell the affected
    employees. Assuming that Tony notified the employees, Mr.
    Raskin the vice-president, makes a special point of expressing
    his regrets to Ralph, one of the laid-off workers at the
    Christmas Eve church service they both attend. The shocked look
    on Ralph's face makes it obvious to Mr. Raskin that Tony has
    said nothing to Ralph. Later in the evening, a very angry
    vice-president calls Tony.



    At this point, Tony has no excuse for not doing as he was
    instructed. He must tell Arnold Raskin why he did not inform
    his unit of the layoff as he was directed. While this
    conversation is going on, Ralph may be calling his co-workers
    asking them what they know about the layoff, exacerbating the
    situation. Now it is even more imperative for Tony to notify
    his unit of the layoff immediately. In delaying the news, Tony
    hasn't made it a happy holiday for anyone.



    III



    At the last minute on Christmas Eve, Shirley Vandermere
    makes a non-refundable $500 deposit to secure reservations for
    a surprise European trip with her husband. Had Tony notified
    his unit of the layoff as directed, he probably would have
    called Shirley before 4:30PM. I doubt if she would have then
    secured the reservations since she was very concerned about the
    non-refundable deposit, if her husband would even be pleased
    with the idea, and with the surprise. Now she'll be (to put it
    mildly) very upset after making the non-refundable deposit for
    a trip to learn that Tony deliberately delayed notifying her
    about the layoff. And, she has a triple surprise for her
    husband: her layoff, the non-refundable $500 deposit, and a
    trip they may not be able to take because of the loss of her
    income.

  • Posted 12 years and 10 months ago

    I



    Tony is told to lay off his entire unit the afternoon before
    Christmas. What a mess. Naturally he's unhappy with what he's
    been told to do, but he fails to contest the order. He might
    talk to VP Arnold again and try to get him to change his mind.
    Arnold has not given Tony any reason for the rush; Tony has a
    right to know why the layoffs have to be made in such haste. If
    Arnold's reason is inadequate, or if Arnold tells Tony he
    doesn't know the reason and doesn't care to know, Tony is
    within his rights in delaying, and in telling Arnold he won't
    do it until someone explains to him why it's necessary,
    although to do so would risk insubordination. If Arnold has a
    good reason, Tony has little choice but to carry out the
    order.



    II



    What Tony decides to do is disobey Arnold's order without
    telling Arnold and without finding out what's behind the fast
    move, and naturally fate is such that things instantly go
    wrong. Arnold, who finds out about Tony's insubordination
    through a chance encounter which is also embarrassing to
    Arnold, is understandably irate at Tony, and Tony had better
    apologize and hope for the best. He can only make things worse
    for himself by trying to make excuses. He might ask himself why
    he didn't tell Arnold that he wouldn't deliver the lay-off
    notices? Is he afraid or disrespectful of Arnold? Is he unsure
    that his action is correct? Tony's action behind Arnold's back
    may be a sign that something is very wrong in their
    relationship.



    III



    Now things get worse and worse. Even the victims suffer from
    Tony's attempt to be Mr. Nice Guy, as Shirley spends big money
    assuming she still has a job. The moral is that the sooner
    people receive bad news, the better: attempts to spare them
    grief may backfire since people make plans based on what they
    think they know. However you can't blame Tony for not being
    able to foresee every possible outcome. If he's entitled to use
    his discretion at all (which is questionable), then he's
    entitled to act on what is reasonably going to be best for most
    of the people affected. He's probably right that most would not
    want their Christmas spoiled by a layoff notice; but there's no
    guarantee that everyone will be pleased by the delay.

  • Posted 12 years and 10 months ago

    The significant point about which this case revolves is
    "credibility." If management is to be credible (trustworthy,
    believable) in the eyes of its employees communications to
    employees must be open, prompt and honest. A supervisor (in
    this case, Tony) has the responsibility of communicating to his
    workers. This communication usually involves passing on
    information that has been communicated to the supervisor from
    upper levels of management. It is a part of Tony's job to carry
    out this communication process and to do so in such a manner
    that he preserves his credibility and that of the management to
    which he reports. This responsibility for communicating
    promptly to the workers supervised is a part of the maintenance
    of the supervisor's credibility and this communication
    responsibility is not relieved just because the news is
    bad!



    One can infer from Tony's handling of his communication
    responsibility by delaying the delivery of bad news that he
    would have functioned differently had the news been good. Had
    Arnold asked that Tony inform all the people he supervised that
    they would get a surprise Christmas bonus, you can imagine Tony
    would have communicated this news promptly and efficiently.
    Some supervisors fall easily into the trap of only passing on
    good news and/or favorable comments. Of course, in so doing,
    they are undermining their own credibility when the worker
    finds out through other channels that some information has been
    withheld.



    In the Tony-Ralph-Arnold situation Tony has damaged his
    reputation and credibility with both Arnold and Ralph. Arnold
    has every right to be angry and disillusioned with Tony for
    failing to carry out his responsibility as a supervisor.
    Although Tony may feel that he was right to wait until after
    Christmas to deliver bad news to Ralph, in doing so he has
    caused Ralph to lose any faith he had in the credibility of his
    supervisor.



    Shirley, too, will not only suffer a financial loss but will
    be reluctant to trust the next supervisor for which she
    works.



    An excellent organizational climate exists when confidence
    and trust prevail throughout an organization. Management has
    trust in the employees and the employees have trust in
    management. In such an organization whenever management
    presents something in words, either orally or in writing, this
    communication is perceived by the employees as being true. If
    the actions of managers are consistent with their words,
    managers have considerable credibility in the eyes of the
    employees. Confidence and trust are an outcome of authenticity.
    Tony's single act of delaying the communication of the "before
    Christmas layoff" has dealt a serious blow to the confidence
    and trust the employees have in management in his
    organization.



    The workers Tony supervises will be reluctant to trust him
    as a communicator and supervisor in the future. Upper
    management, too, will have lost its trust in Tony's competence
    as a supervisor and may very well be justified in relieving him
    of supervisory duties.

Cite this page: "Informing Employees About Layoffs" Online Ethics Center for Engineering 6/15/1992 OEC Accessed: Wednesday, June 19, 2019 <www.onlineethics.org/Resources/csaindex/Informing.aspx>