Integer Leadership Consulting

This is a thought-provoking editorial on the moral dilemma of organizational layoffs. The question is this, “Does the organization laying off employees have a moral obligation to those employees?” This is clearly a vexing question. Some would argue that, in fact, “no,” organizations have no moral obligation to employees when those employees must be involuntarily laid off in order to preserve the performance of the business. Others would disagree saying that, in fact, “yes,” organizations do incur a moral obligation to their employees that supersedes the performance of the enterprise.

Whether or not a company has a moral “obligation” to their employees experiencing involuntary job loss may not be the real issue here. A publically held business enterprise is first of all obligated to its shareholders. Business decisions must focus on profitability (considering that all decisions about what leads to profitability have been ethically based) for those who have vested interests in performance. A business also has moral obligations toward fair and just compensation as long as employees are retained. A healthy organizational system will often generate healthy morale which can lead to greater efficiency and productivity.

But what about “after” employees are terminated? Are there moral obligations then? My opinion here is that while business enterprises are not automatically morally obligated to their job losers, they should choose to obligate themselves willingly in order to ensure that those who are terminated are treated with dignity, value, worth, and esteem. If a business takes on this type of a moral obligation with those terminated, they will take concrete action to mitigate, as much as possible, the economic and psychological impact of the job loss that takes the organization “well beyond” what is reasonable and appropriate.

How a business provides for the well-being of terminated employees is the issue here. Driven fundamentally by a desire to preserve its reputation, a company can do what it knows it must do (the minimum) in order to prevent bitterness and public backlash. However, it can go beyond what it knows it should do to respond to what it feels is a deeper moral imperative: to preserve the well-being of its former employees. Job loss research consistently shows that employers who go above-and-beyond what is minimally required for terminated employees contributes significantly to the well-being and “hope” of those employees. Reemployment seems to be a smoother process when a job loser leaves a former employer with gratitude despite the difficult decisions that have been made. Conversely, significant bitterness is generated when employees perceive that they have been tossed aside like a useless piece of human debris.

While a company is not morally obligated to those it terminates, it should consciously choose to obligate itself morally to provide support and care for those who are asked to leave the organization. This is the greater good. . .the higher road. . . for both the terminated employee and the employer.