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Ethics In The Workplace Case Study Action Plan: Scott Paper Company

2311 words - 9 pages

AbstractScott Paper Company provides an inside look at a major corporate downsizing program led by the controversial turnaround manager "Chainsaw" Al Dunlap. By the end of the restructuring in late 1995, when Kimberly-Clark acquired Scott, the market value of Scott's common stock had increased by more than $3 billion. Dunlap's personal wealth increased over this period by nearly $100 million, reflecting his compensation and appreciation in the value of his Scott stock holdings and executive stock options (Gilson, 1994).No employee issue has created as much media attention and more employee anguish than company downsizing. Popular press articles suggest that thriving corporations regularly reorganize their workplaces, leaving many people out of work even when their former employers face no imminent financial threat. Changing patterns are some of the reasons cited for job loss support this impression of the rising importance of streamlining operations. Differences in factors such as the state of the economy and the signal sent by job loss could make the process of downsizing and the effects of job loss differ between restructurings of healthy organizations and downsizing due to financial misfortune.This paper provides an in-depth look at the effects of restructuring and the massive job loss at Scott Paper Company in 1993, and the large affect it had to the community Scott paper serviced. Albert J. Dunlap, a self-proclaimed "Rambo in pinstripes" showed little or no sympathy, when in less than seven months created his very own crisis, and eliminated 11,200 people, which was one-third of its workforce. Seventy-one percent of the headquarters staff, which included 50 percent of management, and 20 percent of the hourly employees; this was considered one of the most controversial downsizing cases in the U.S at the time (Nelson& Trevino, 2004).So we ask, what were the sources of the Scott Paper companies' ethical obligations to its long-term employees? Were Al Dunlop's motives based solely on the trends of the market? The goal of restructuring should be to increase the overall market value of the business; often the gap that restructuring addresses is very large, in the billions of dollars possibly.Research suggests there are usually three primary motivations for reorganization; the first is the poor financial performance, second, is the need for a new corporate strategy, and lastly it is used to correct how the company is valued in the capital market (Jenkins, 1994). In this case the warning signs were clear at Scott Paper with the declining sales, stale product lines and some irrelevant business ventures; a lagging revenue stream and stock price, also contributed to the massive restructuring.In a 1996 interview with economics correspondent Paul Solman, Al Dunlop showed no remorse or regret regarding the layoffs when he was asked what his definition of corporate responsibility, his response was cut and dry. He stated: "A corporation is in business to...

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