1.0 Introduction
Ethics, defined as a rule
of conduct, to have the discipline with dealing in a right or wrong situation.
What forms or compose a person’s ethical behaviour varies between one people
with another. Although ethics are conformed towards individual in relating to
what is right and what is wrong, but this does not include in an organizations.
What forms ethic in an individual consists on these factors such as, family,
peer and life experience, including the personal values and morals and also
situational factors. Having ethical dilemma usually involves on the matter of
having to do what we think is right although the outcome might have
consequences.
The conflict does not only
occur within a personal experience of an individual. Having ethical dilemma in
a management can happen. Being in a managerial position, having ethical dilemma
usually is when, there arise a conflict within or when it involves the
organisation’s performances, economically and socially. The decision of a
person in that managerial position must be balanced and to have the decision
made without having to jeopardize either one of the above said performances.
There are five
characteristics of ethical problems in a management.
1)
Extended consequences
-
This is when the decisions made by the managerial position affect
not only within the organisations but also extended to the society outside,
which is usually beyond their control. For instance, having to approve products
that might affect other people’s health or taking in bribery. Therefore,
decisions made on either of the situations or some other, must be done
considerately.
2)
Multiple alternatives
-
Not all ethical issues depends on a ‘yes’ or ‘no’ decisions.
Some ethical decisions can have multiple alternatives. Such as, should an
employment agency use child labour or forced labour? Or, should an organisation
ignores the health, environmental or safety standards? Therefore, the
managerial position must consider on multiple alternatives before making
decisions ethically.
3)
Mixed outcomes
-
Also, when a decisions made even unethically, the benefits
would be return to the company or organisations itself, examples such as having
good financial returns and social costs. Such as, by paying an amount of bribe,
the company can maintain or get new sale contract with one organisation with a
big account, with that they can have a permanent customer that will always
purchase their products.
4)
Uncertain consequences
-
When a decision is made for this ethical dilemma, the
consequences are uncertain. For example, after paying a sum of bribe to the
organisation, you will have an account with the organisation and a permanent
customer that will always purchase your products. But it might turn the other
way. With every ethical decision, the consequences are uncertain.
5)
Personal implication
-
If not all, most of the ethical decisions will have personal
implications. It is not supposedly thought that the dilemmas are not affecting
the careers and lives of those in the managerial positions.
2.0 Background of
the ethical problem
Back in year 1998,
recession occurs in Malaysia. This is due to the Asian Financial Crisis. At
that time, a lot of companies, big and small are having a tough time coping. A
lot of people are ‘let go’ on a ‘last in, first out’ basis. It is definite that
the impact of that year recession is felt through all stages of society, people
and organizations alike.
With having one of their
company values are its people and teams, which by their beliefs in order to
deliver strong results which will be impossible to accomplish without a highly
capable team. And through that all, their goal is to be the preferred employer
within the industry that they are in.
One Human Resource Manager
(will then be referred to HRM) from an international oil and gas company are
put in the position to ‘let workers go’. The company had hired many expatriate
engineers and for other professional positions. The management made a decision
to lay off some of their staff. It is up to the judgement of the HRM on how and
what are to be considered be it for the employer’s revenue or employee that
will be lay off. The HRM will need to
choose whether to lay off the engineers or clerical staff. Clerical staff
cannot be dismissed because they are needed to support on clerical duties that
are necessary in order and to assist these upper rank positions. As there are a
lot of paper work that will need to be done and the engineers will not always
be in the office but at site. Same goes for the engineers, if they are
dismissed, how are the company’s project be conducted on site? The HRM will
need to make a decision on workforce reduction but at the same time to make the
company balance and save revenue on paying salaries to the staff during those
dire times.
2.1 Organization
background
The company is an
international oil and gas company. The branch in Kuala Lumpur, Malaysia is one
of the branches opened worldwide. The main office is in Norway. The company
specializes in oil well equipment supplies and services. It is also involved
with downstream offshore projects and also oil and gas consultancy. It is a
large scale global company that has the experience of 40 years on offshore and
onshore drilling rigs. They also deliver drilling equipment’s and lifecycle
services.
The company believes on
that, making money creates new opportunities and the resources for going
forward, both for us and for our customers and partners.
The company’s values sets
that they share a common set of values and that common set are used as guidance
to how they construct their policies and behaviour, and on how they manage
their operation.
Their values are they
encourage an early and honest communication, open and direct dialogue; the
management listens to their employees, hard and straight. No filters, no sugar
coating.
The company also values
early, accurate and reliable communication. This to their beliefs, when known
earlier is easier to solve. The company opts from different opinions and
cultures. In order to strive and excel, they challenge each other in a positive
manner. The company expects from all of its staffs everywhere, to have the
highest standards of ethical behaviour and integrity. They reward the employees
on their performance- on what they achieve that is aligned to the company’s
value and – how the employees behave. They believe that it is hard to achieve
strong results without having a strong team.
The company’s mission is
to be the preferred partner in solutions for the oil and gas industry through
living up to their set up values and as the preferred employer within the
industry. They wanted to strive as a responsible societal actor and see it as
the key importance towards this. They
want it to be balanced in areas of people, integrity, and environment and to
the community
The company organization
consists of (Refer Appendix I).
2.2 Identified
ethical problem
The ethical problem
identified faced by the HRM is workforce reduction.
What is workforce
reduction?
This is when an employer
needs to reduce costs by instituting mass termination of employees. It is also
known as reductions of force or downsizing. Workforce reduction usually
involves in a permanent termination of employment, by shifting employee’s task
in order to reduce number of positions of worker, reducing employees work hours
or by having institute mandatory layoffs or furlough. Layoffs are permanent
termination of employment whilst furlough is a temporary time off in which the
company will not pay the employee.
The reasons of workforce
reduction may occur due to changes to economic markets, change of management,
poor management or other reason that might conflict to why a workforce
reduction is needed to be conducted.
When an employer conducts
a workforce reduction, which might take some time as several weeks or longer,
the employees will be selected and assessed for the possibility of termination.
The selection of employees will be based on the performance of the employees,
although the terminating depends on the discretion of an employer’s budgets and
needs. After the process of selection and assessments are made, the employees
are then fired. The employees may be offered by the employer’s benefits in
order to ease the transition period after their termination. The employers may
provide their employees unemployment compensation or severance packages or in
some case the employer will provide placement services. This service intends to
assist their former employees in securing another job after they are
terminated.
2.3 People
involved
Usually during the process
of selection and assessment, people involved are usually the Head of
Departments, the Human Resource Manager and final approval by the CEO or COO.
The Head of Departments
will gave assessment of their opinion on their departmental staffs by filing up
a form provided by the Human Resources Department. These forms are usually
similar to the appraisal form that is used to assess staffs performance by
annual.
From there the forms are
passed to the Human Resources Department for checking and selections. These are
then compiled and they will be checked with accordance to the staffs MC’s,
lateness and credibility. From the selections it will again be assessed by the
Human Resources Department on whether the selected staffs are a liable asset to
the company or not.
Final decision will be
made and it will then be forwarded to the CEO or COO for approval, and finally
be laid to the selected staffs that are to be lay off.
3.0 Classification
of the problem as an ethical problem in management
There are several
characteristics of an ethical problem in management.
1)
Extended consequences
2)
Multiple alternatives
3)
Mixed outcomes
4)
Uncertain consequences
5)
Personal implications
The decision of the
employer to have workforce reduction as an act to keep their company stay
within the budgeted revenue will always be a conflict for both the employers
and employees. How the problem on workforce reduction does, classifies as an
ethical problem in management? Explained within three characteristics taken
from above:
1)
Extended consequences
To lay off employees will
defy one of the company’s values of wanting to be the preferred employer within
the oil and gas industry. And by doing or taking that decision, many will go
jobless. And should there be one staff that might have a close relationship
with one of the upper management or the Human Resources Manager itself, but he
or she needs to be laid off, it might jeopardize that said relationship.
2)
Multiple alternatives
Before really deciding on
workforce reduction, the management or the company should consider on other
alternatives. Such as furlough, freezing of salary and increase of benefits and
hiring freeze.
3)
Mixed outcomes
But, by having workforce
reductions, the company stands better chance on balancing their revenue that
has been budgeted for them by the headquarters. But if the decision is on
keeping the staffs, the company will lose the budgeted revenues. But if the
person mentioned above be kept, another conflict will be inflicted between the
staff on the reasons why they are laid off.
4)
Personal implications
Every ethical decisions
made by the management will always have personal implications. Having to make
the decision to reduce workforce had to be done meticulously and the
information will need to go and be understood by the employees, so that it will
not be misjudged. Bad reputation for the Human resource manager might be
inflicted by the staff on him or her and the ultimatum is that he or she will
be left on having that guilty feeling on having to be the person responsible to
execute the command given by the higher management. The people involved in this
matter must have the character of being firm and knowledgeable on what the
company is facing and why the decision must be made. They must have the courage
to stand and face the chosen employees that are to be laid off.
4.0 Analysis
of workforce reduction as an ethical problem in management
As mentioned earlier,
ethical decisions are not only based on a ‘yes’ or ‘no’ decision. Or whether
the decision made is to be right or wrong. To lay off staffs aren’t just merely
picking up whom we hate or whom we feel that should be laid off or that the
staff needs to be laid off just because of a simple and small typical reasons.
Ethical decision needs to be made based on the balancing between both economic
and social performance of an organisations.
There are three ways of
analysis method of an ethical problems. Economic analysis, legal analysis,
ethical analysis.
Here explained on the
analysis of workforce reduction.
1)
Economic analysis
To reduce employees are
not an easy decision. Laying off employees is costly. The company will need to
pay some amount of compensation to the laid off employees. Therefore anther
budget had to be opened for the matter. But by the positive side, even though
the company might need to spend extra on VSS, but the bigger revenue that are
to be concerned off are kept balance. And also the incompetent staffs will be
dismissed, and better, stronger team can still continue to give satisfactory
results. It is unpleasant for people to lose their jobs, but there will always
be a demand on workforce and they will be employed, either sooner or later.
2)
Legal analysis
Employments are usually
done on an at-will employment. What this means is that an employee may be (so
long that the termination is not considered illegal) terminated at any point or
any reason. Therefore, employees who works on an at-will basis can be
terminated should there occurs the need of workforce reduction or downsizing.
Not to take matters alight, even at-will employed staffs have their rights to
be free from the employments discrimination during the said termination
process. The reduction of workforce must not be based on the employee’s race,
religion, gender, age, disabilities and national origin. So if any of the above
is detected to be violated, the employer can be held liable for employment
discrimination. So they need to abide to the termination laws that govern for
corporate layoffs. And should the decision is deemed necessary, it should be
documented. So that should it becomes an issue, the employer can provide sufficient
evidence that leads to layoff and that there has been other alternatives
considered and tried. And should it results to litigation, the documented
evidence would be sufficient to prove the reasons of layoffs that has been done
and that being the only choice after all consideration made. The legal approach
can always be one of the way should an ethical decision rises such as this
arises, as a way to deal with the decision.
3)
Ethical analysis
By ethics of human
feelings, dismissing staff are a wrong code. But the management will need to
consider on the structure of normative philosophy in deciding what to do or
whether it is right or wrong. Decisions on this kind of matter must take forth
for the greater good of the company and by putting themselves as obeying
instructions from the upper management as stated by their scope of work.
5.0 Proposed
solutions
There are several ways of
solving the matter before we concede towards the reduction of workforce. There
is by way of furlough. Reduction of work time for the employees by constituting
the company’s own schedule time. Such as giving them time off and off days,
once or twice a week. Therefore the cost of salary payments can be cut off.
The management might want
to take in consideration of having freezing the salary and benefits, and will
continue back on track once the company is up on the regular state. But it will
need to be implemented and explained by the managements to the employees in
detail and updates are to be done periodically so that, no miscommunication
would occur.
Should the solutions are
not beneficial to the company and still needed to have reduction on workforce,
then the company can pursue on laying off by VSS. But this needs meticulous
calculations and series of in depth, checking, selecting and assessing are
required before final decisions are made. Layoffs should be done by letting go
the temporary staffs first before heading on to permanent staffs.
6.0 Summary
By norms, decisions made
can be considered unethical for some people as they might not know the reason
behind the decision made by the management. But if the decisions are made
following the norms, it will certainly defy the mission and vision of the
company. As in this case, that making money creates new opportunities and resources
in order for them to move forward, both for the company and their customers and
partners. So, if decisions are made by not considering this matter, it will be
unethical by the side of professional views. By beliefs, the company can stand
their balance in revenue in order for them to continue to grow. Employees can
always find other occupation due to demands on labour market. But for an
organization, they must continue to generate revenue to hold on to the
competitive market they are in.
Therefore ethical training
must be provided before an employee commences their work. When proper advice
and guidance on policy, expectations and any relevant laws or social standard
of the company, only then the employee will be well literated and when such
situations occurs, they are prepared and able to evaluate the reasons from the
action taken by their employer.
(2,921 words)
References
1) Susan M. Heathfield;
Before you do a workforce reduction; (2012)
retrieved on 7th July 2012; http://humanresources.about.com/od/layoffsanddownsizing/bb/cut_workforce.htm
2) Ken LaMance; Furlough and
layoffs differences; retrieved on 7th July 2012 http://www.legalmatch.com/law-library/article/furlough-and-layoff-differences.html
3) Ken LaMance; Workforce reductions and downsizing; retrieved on 7th
July 2012. http://www.legalmatch.com/law-library/article/workforce-reductions-and-downsizing.html
4) Reference on organizational chart; retrieved on 4th July 2012. http://www.theofficialboard.com/org-chart/exxon-mobil
5) Dr. H.J Ann (Universiti Putra Malaysia) & Dr K.K Tee (Open
University Malaysia), (2012), Professional Ethics, version May 2012; OUM
