Downsizing 101

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Most discussions about downsizing focus on the legal, economic or psychological issues raised by this practice. These are essential concerns, but we rarely consider how or why downsizing is also an ethical issue. The next two columns are an attempt to redress that problem. Here, we'll consider your ethical responsibilities if you are the one charged with giving the bad news. In the second installment, we'll look at better and worse ways of responding if you're the one being downsized.

What's in a Name?

Downsizing refers to a company's decision to reduce its workforce for reasons other than poor performance, criminal conduct or unethical behavior on the part of those being let go. The word is a euphemism meant to soften the blow as much for the company as it is for the soon-to-be eliminated. There is nothing wrong with making a difficult task easier to bear. In fact, there are good ethical reasons for doing so, as we'll soon see. Still, there is no getting around the fact that downsizing is a type of layoff, with all that this implies. The ethically intelligent manager will keep in mind what is really going on when he or she is charged with letting good people go.

Why Downsizing Is an Ethical Issue

Anytime we're faced with a decision that can affect the rights or well-being of others, we're looking at an ethical issue. No matter how strong the justifications for reducing the workforce are or seem to be, laying off loyal and productive employees is an upsetting experience for all concerned, and those on the receiving end face not just financial but psychological injury.

How so? For many of us, the workplace isn't just a place for work; it's where we develop and maintain some of the most important relationships we have. During the week, we spend more time with co-workers than with our families, and for better or worse, work is how many of us define ourselves and give meaning to our lives. Getting laid off compromises all of these things, so managers should think of downsizing as a deep and painful trauma for those being let go, and not as a mere setback or reversal of fortune.

Yes, downsizing has legal implications, and it's understandable that companies want to minimize their liability when they downsize. Yes, there are economic matters to consider, which makes downsizing a financial issue too. But at its core, downsizing is an ethical issue, and the good manager is concerned not just with protecting the company's financial and legal interests but also with honoring the dignity and integrity of the human beings who work on the front lines and who are the lifeblood of the organization.

Five Simple Rules

I propose the following management guidelines for downsizing with ethical intelligence.

1. Do it in person. This seems like obvious thing to do, but I'm surprised by the number of reports I've heard about employees who were let go on the phone or by email. Managers who use this method claim it makes the whole thing easier to deal with. Yes, but for whom? Certainly not for the employee being let go. As uncomfortable as it is to end someone's employment, the right thing to do is to have a conversation with him or her in person. The ethical principle of respect for others requires nothing less.

2. Do it privately. Respecting others means honoring their wishes and values, and it is reasonable to assume that most people would prefer to have troubling news delivered in private. This means in your office, with the door closed. I've heard of managers who broke the bad news at the employee's cubicle within earshot of everyone in the vicinity. Again, one would think that this would be a matter of common sense and common decency, but apparently neither is all that common.

3. Give the person your full attention. Interrupting the conversation to take phone calls, check your smartphone, or engage in other distractions tells the other person that the matter at hand isn't all that important to you. That's yet another violation of the principle of respect. The impulse to turn your attention to less troubling matters is understandable, but along with the privileges of being a manager come responsibilities, and downsizing with integrity is one of the most important obligations you have.

4. Be honest, but not brutally so . Must you always tell the truth, the whole truth, and nothing but the truth? Yes, if you're giving sworn testimony in a court of law, but beyond the courtroom the duty to tell the truth is constrained by the duty to minimize unavoidable harm. In practical terms, this means being forthright with the employee but also choosing with the care the words, tone of voice, and demeanor you use. Compassion -- literally, "suffering with" someone -- honors the dignity of your employee and speaks to the better part of your nature.

We can't always make things better, but we shouldn't make things worse.

5. Don't rush. A shock takes time to absorb. Imagine that your physician says you have a serious illness. Wouldn't you expect him or her to allow the news to sink in, rather than to summarily dismiss you and call for the next patient? Being let go isn't as serious as getting a diagnosis of cancer or heart disease, but it is still a major, life-changing event. You owe your employee the space to absorb the information, and you may have to explain more than once what is happening and why. You would demand nothing less if it were happening to you, and you would be right to do so.

Note: These guidelines assume that the organization has good reasons for downsizing -- but what if you don't see things this way? For example, suppose your company believes that it is necessary to shift its customer service jobs overseas, and you believe that doing so is both unethical and bad for business. In this case, you not only have a right to object, you have an ethical obligation to object.

Does this mean that you should be prepared to give up your job on moral grounds? Not necessarily. Depending on your personal circumstances, your duties to your family or to yourself might justifiably override the value of making a statement by quitting. Even if you are committed to keeping as many jobs at home as possible, this goal will take time to achieve, and it may be easier to do so from within the company than from the outside.

The bottom line is important, but so are the values of respect, compassion, and simple human decency. The good manager takes all of these into account--always.

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This was published originally on Bloomberg Businessweek Online.

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