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Is The Corporate Strategy Of Downsizing Unethical?

1396 words - 6 pages

Throughout corporate America, downsizing is a common practice. The concept of downsizing as a strategic tool wasn't introduced until the 1980's, and today it is a well known system. This has been caused by the accelerated growth of international and global competition throughout the past two decades. Increasing competition is forcing companies to drive their costs as low as possible, and the quickest, easiest way to cut costs is to cut jobs. Top management within corporations is most worried about the impact downsizing will have on their costs, and they are usually less apprehensive about the influence on the employees affected. Two views on this topic are presented in Marc Street's Taking Sides. The first will argue against downsizing for any reason, saying that business have other responsibilities that extend beyond maximizing shareholder pay outs. The second will take a more in depth look at questioning the morality of downsizing. Both arguments have valid points and the authors present their arguments in an effective manner.In "Downsizing: Are Employers Reneging on Their Social Promise?" by Larry Gross, the author refers to a theory discussed earlier this year. The stakeholder theory is Gross' defense against downsizing. According to Gross, "Downsizing is in direct conflict with the Stakeholder Approach to corporate social responsibility" (Gross 26). When companies lay off workers in order to maximize profits, they are ignoring their initial responsibility to their employees, as well as the communities around them. Downsizing does not always result in the desired outcome either. A company could lay off some of its workforce to avoid going bankrupt. However, because they have a smaller amount of people to do the job, the job isn't done as well causing the profits to drop even more. When a company decides to downsize, the employees that are left over after the cuts are more distrustful of their employer. Using downsizing as a managerial strategy causes the company to focus on economic goals over their obligation to their employees, which in turn causes doubt. Gross also argues that downsizing not only hurts the employees, it hurts society as a whole. "The reduction of the work force for the singular purpose of reduced costs/more profits breaches the integrity of the corporation has in relation to the quality of its contribution to the overall health of society," Gross says (Gross 28). In addition to his arguments against downsizing, Gross does not deny that this practice will most likely continue to be implemented more often. He suggests that corporations should do more to provide training or even job placement for employees who might lose their jobs due to downsizing. This along with a consistent communication plan is important to any efforts designed to help an organization gain more trust during times of change. Gross sums it up best when he says, "The reality is that although we cannon escape the dynamics of change, we cannot allow it to...

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