The phrase “corporate downsizing” raises a red flag in the minds of employees who work for U.S. corporations. In recent years, companies have eliminated thousands of jobs to remain competitive. Downsizing enables companies to increase profits, lower costs, operate more efficiently, and improve a company’s overall financial status. Depending on the situation, downsizing can also decrease productivity, destroy employee loyalty, contribute to high unemployment, and label the company as lacking social responsibility. Differing interpretations of downsizing and of its ethical implications carry over to the ways in which companies handle layoffs.
In August 2006, about 400 RadioShack Corp. headquarters employees received an email notifying them that they had been let go, effective immediately. According to Chairman and Chief Executive Julian Day, the company wanted to cut costs and restore earnings growth to improve the chain’s “long-term competitive position in the marketplace.” Soon after sending the e-mail, employees were instructed to attend a meeting to receive information about their severance and outplacement services.
For organizations that routinely communicate important news electronically, notice of a layoff via email is normally viewed as an appropriate channel for sending this type of negative news. However, executives need to be careful not to “dehumanize” employees, according to Derrick D’Souza, professor of management and associate dean at the University of North Texas College of Business Administration. He notes that from an employee’s perspective, this type of corporate action “tends to dehumanize this important and delicate activity.” Employees who have put in years of service with a company may resent the fact that all they get is an email notifying them that they no longer have a job.
The practice of notifying employees via email that they no longer have a job has become common. Yet, it can be viewed as dehumanizing to employees. As director of human resources, develop a specific plan for notifying employees of corporate downsizing for a company such as RadioShack. Write a one-page memo to persuade the CEO to adopt a more suitable, less dehumanizing, strategy for notifying employees of their layoff.
Article on RadioShack:
Landy, H. (2006, August 30). Employees learn of layoffs via e-mails. Fort Worth Star-Telegram.
* Developed and submitted by Judith Biss, Stephen F. Austin State University.