2016-07-27
John Cordova had barely arrived at work that Friday morning several months ago when the boss called him into the conference room and motioned for him to take a seat. In a movie, a dirge would have provided background music. Sitting across the table, the president of the Atlanta telecommunications company put down Cordova's weekly paycheck and slid it over to him. "We've run out of money," he said. "We appreciate the work you've done, but we've got to make some cutbacks. This is it."

And so it was. No severance pay. No paid vacation. No notice.

As the economy becomes tighter, the pool of the unemployed is spreading from textile mills to e-businesses to the hospitality industry and on and on. For the week ending Sept. 22, about 48,900 Georgians collected unemployment, nearly double for the same week a year ago. Late last month, Atlanta-based Delta Air Lines announced 13,000 job cuts.

Stunned workers stare at pink slips, wondering how the bosses decided who would stay and who would go. Are there rules for downsizing a company? Did officials consider children in college? Aging parents? Out-of-work spouses? Are managers still collecting their big paychecks?

In short, what are the ethics of layoffs? "People are talking about this issue now in terms of whether it's patriotic to lay people off, and of whether you should take personal considerations like family issues into account when you lay people off," said Harry Van Buren, who works with the Episcopal Church's Social Responsibility in Investments program.

Van Buren, who also teaches in the College of Business Administration at the University of Northern Iowa, takes the position that, for ethical reasons, companies should avoid layoffs whenever possible by tightening the corporate belt in other ways. The community may be better served if everyone takes a pay cut or a cutback in hours rather than having some people put out of work, he said.

But when all else fails, to save the company and prevent putting everyone out of work, sometimes some workers must go. How a company handles cuts says a lot about its corporate character, said Robert Lewis, regional senior vice president of Lee Hecht Harrison, a firm that works with companies going through reorganizations.

Many companies have a statement of values espousing respect for the individual, said Lewis, who describes himself as a committed Christian. The company could even be based on the founder's religious beliefs. Sometimes the values are merely words on a plaque on a wall. Other times, they drive the company in all its enterprises even downsizing. "Your corporate values are reflected in how you handle people in a layoff situation," he said. Usually, in the absence of a contract that spells out how terminations will be handled, companies look at a combination of skills, performance and tenure.

But do they look at personal circumstances such as families, health and marital status? "It depends on the culture and environment you've created," said Daniel Rodriguez, assistant professor of organization and management at Emory University. "If that is a family-friendly environment and some companies are like that in the long run employees with stable families can prove to be an asset. "On the other hand," he added, "they also can prove to be potentially less productive and potentially more expensive to the business."

Consider this: A married man with a working wife and children in school may be less likely to leave his job and move across country for a few thousand dollars a year more. But if his daughter gets sick, he could miss work, be distracted from his job, and draw heavily on the company's insurance plan.

Or: A boss lets three productive workers go in order to keep people he fears would be unable to find other jobs. The remaining workers may feel increased loyalty to the company. But, without the most productive workers, the overall output of the department may decrease and more people may end up out of work.

Managers may be naturally inclined to try to protect the most vulnerable workers the chronically ill, the aging or the single parent, said Ron James, president and CEO of the Center for Ethical Business Cultures in Minneapolis. "We're human beings," he said. "There's a tendency to think about those things."

But, he said, those are not the issues that ought to determine layoffs. "Leaders have to use those criteria which are closest to their decision points, that they have more control over," he said. "Typically, those are more work-related."

A manager may know that one worker is a single mother who hasn't seen a child support check since 1988, but she may not know that the dynamic single man in her office is supporting a father with Alzheimer's in an extended care facility. "The minute you start using personal situations to make decisions," he said, "you're at a disadvantage because you don't have all the information."

Managers can and should look at personal circumstances in helping people through layoffs by providing severance, career counseling, benefits and mentoring, said James, who in 24 years of previous corporate jobs occasionally was responsible for handling layoffs. He went to work for the center, he said, because he believes in the need for intentional examination and application of underlying values in business.

One way companies can create goodwill among employees, allow for personal circumstances and avoid unnecessary layoffs is to involve workers in decisions whenever possible, said Dawn Deeks, media coordinator of the Association of Flight Attendants, representing 50,000 workers at 26 airlines.

In her union, she's seen cases when some flight attendants voluntarily went on furlough or shared jobs to keep others from being out of work. "It's a collective process," she said. "I can very easily see that while my number isn't up today, it could be tomorrow."

If all those efforts still don't reduce the work force enough, management has to be willing to make the tough decisions. Good managers will probably not take pay raises while workers are losing their jobs, said Van Buren of the Episcopal Church's investment program. "They should be willing to appropriately share the burden the company is facing," he said.

In Atlanta, for instance, Delta chief executive Leo Mullin got high marks for forgoing his salary for the rest of the year as the company cuts back.

Ultimately, doing the right thing by people who must be let go usually also means doing the most astute thing for the business, the experts say.

By being truthful, respectful and as generous as possible, a company helps maintain trust, said Emory Mulling, chairman of the Mulling Companies, an outplacement, leadership development and recruitment enterprise. "It hurts top management if they don't do this," he said. "It hurts their credibility."

As for Cordova, who was laid off earlier this year, he's now working in the technical field in Savannah. He said he learned something from his experience. If he is ever a manager, he will be better prepared to handle cutbacks. "Mostly," he said, "I'd just try to be fair to the employees."

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