The Ethics of Corporate Downsizing
In this reading, John Orlando discusses ethics when corporations deem it necessary for layoffs and cutbacks on personnel. The reasons why corporations downsize is because profit is low, which Orlando sees as being justified. However he views downsizing as unethical when corporations do it in an effort to increase profits. Cutbacks lead to a decline in employee earnings, widening of the gap between rich and poor America, psychological depression, drug abuse, homelessness, and even suicide. Ultimately, Orlando links downsizing as a dilemma between the worker and the shareholder that the corporate manager must work out.
Shareholders are the legal owners of the corporation which would give them property right. But the corporation is not for personal use, it is used to conjure up profit. This creates a duty that the manager owes to the shareholder being that capital is invested and they (shareholders) are the ones taking a risk. Orlando believes that a risk and a sacrifice is made by the worker being that they have invested a lot of time and money in school to obtain this job that may not be secure. Shareholders do not view themselves as owners of the corporations, they see themselves as investors. But when an employee takes a job, it is a potential lifelong commitment. Both parties are taking a risk. Orlando argues that the employee is taking a greater risk because the shareholder can easily sell their share and invest in another company; the employee has to find another job, not only another job, but one the he/she is qualified for and then deal with the hassle of relocating.
Orlando then tries to view this matter from a Utilitarian perspective. Utilitarians do what would benefit the greater of the population because they see that as being morally right. Shareholders outweigh employee's and when a corporation benefits - the effect it has on the economy in complimentary. So one can say that the shareholder takes precedence from...