On The Promise Abstract Scott Adams Maximizing Shareholder wealth is a foundational principle of financial management. This leads to an implied ethic that as long as stockholders are making money, then the ethical things is being done. The issue of layoffs is explored using utilitarian, rights and duties, and justice and fairness criteria. The type of layoffs explored are those involving a company that is doing well, but believes layoffs will further improve their situation. It will be shown that layoffs are sometime unethical.
On The Promise
Running Head: ON THE PROMISE
On The Promise Scott A. Adams Anderson University
On The Promise
On The Promise The temptation in financial management is to boil everything down to numbers and not consider other issues. A primary foundation of finance is that management should maximize shareholder wealth (Scott, 1999, p. 3-4). Shareholders have a wide variety of interests, but share a single goal of having their wealth increase. However, this principle has an implied ethic which indicates that as long as money is being made for shareholders the ethical thing is being done. Historical Dilemma Ethical thought should be given when layoffs are contemplated. The ethical issues surrounding layoffs are many because there is a wide range of circumstances where layoffs are involved. Sometimes laying off workers is the moral thing to do and sometimes it is unethical. The criteria for deciding this are much more complicated than whether or not shareholder wealth is maximized. Companies use layoffs to reduce their workforce. This decreasing of workforce is quite different than firing. In a layoff, people are let go through no direct fault of their own. Firing implies termination for cause. An employee let go for stealing or continual tardiness is not laid off. Further, layoffs will not include the choice to simply not fill a position and let the workforce shrink through attrition. In this case, an employee leaves...