Business management is fraught with several ethically contentious decisions that need to be made by managers at various times. Often such decision tends to place the managers in a moral dilemma as they are faced with the choice between doing their job and maintaining their sense of integrity. While it is essential that business managers bring about a balance between career and ethics, the decision-making process tends to be strained and under high pressure (Wankel and Stachowicz-Stanusch, 2012). One such dilemma regularly faced by managers is corporate downsizing.


The process of corporate downsizing results in a reorganization of the company structure and leads to layoffs among a part of the employees. Downsizing may have occurred due to various reasons like mergers resulting in redundancy of positions, cost cutting, introduction of new technology, and decrease in demand for the product, fall in sales volume and so on. While this is a purely business decision the impact on the human element tends to be acute. Terminations due to downsizing are usually due to technical reasons and not due to faults on the part of the employee. Hence they tend to feel aggrieved and wronged. There arises the tendency for lawsuits from employees, paranoia on the part of remaining employees towards their jobs as well as breeds a long term distrust among present and past employees towards management in general (Schenkel and Teigland, 2016).


The need to contemplate downsizing on behalf of the management tends to put most managers into an ethical turmoil. They are the mouthpieces of the management and hence need to bear the ire of the workers when the management’s decision is communicated to them. However, downsizing is usually the last resort by management since it is usually accompanied by monetary losses as well as tends to accumulate distrust towards the management. Monetary costs include severance pay, settlement of all pending dues to employees, as well as rehiring and training costs at a later date. The additional expenses towards supervisory costs and the low productivity of the new recruits is also considered as part of the decision making process. While contemplating downsizing, the management would consider the impact of all these additional costs before arriving at the decision to lay off employees (Schenkel and Teigland, 2016).

On the other hand, downsizing provides the business with the opportunity to refine its vision for the future. It is also an opportunity to streamline processes and inculcate the culture of rewards and recognition for those whose performance exceeds expectations. New alliances can be created across departments alongside a new and enhanced work ethic for individuals and the business. Thus, downsizing can be compared to a rebirth for the business, wherein past mistakes are accepted and the organization looks at moving forward with determination, honesty and perseverance subordinates (Muñoz-Bullón and Sánchez-Bueno, 2013). The human quotient needs to be given due importance through humanitarian consideration for those who have been let go and an assurance of continuity for those who get to stay on(Schenkel and Teigland, 2016).

Making the decision to let go is not always easy and in this situation the manager needs to be able to draw the line between fulfillment of duties and moral responsibility. The manager needs to get over the feelings of remorse and guilt that he may feel over the task. Instead, he must focus on the need to ensure that a similar situation does not occur any time in the future. Most managers are also under the fear that if they do not remain loyal to the management, they would be faced with a similar situation themselves. This feeling of powerlessness is all invasive and tends to drain the motivation from the manager as well as his subordinates (Muñoz-Bullón and Sánchez-Bueno, 2013). Hence it must be avoided by all means.


Corporate downsizing is the bane of modern businesses. Both those laid off by the act, as well as the survivors are prone to emotional upheavals as they come to term with the management decision. The accusation invariably leads the manager, who has had to carry out the act as part of his job. In this situation, it is bit natural that he is faced with the ethically contentious business issue and tends to oscillate between guilt over is actions and fear over the uncertainty that lies ahead (Schenkel and Teigland, 2016).  The manager can overcome this situation by assuring the survivors that while the company truly values all its employees it had to take the decision from necessity. He also needs to assure employees that the company would be in a position to provide job security going forward. This would help him deal with the ethical dilemma that he is facing.




Muñoz-Bullón, F. and Sánchez-Bueno, M. (2013). Institutional determinants of downsizing. Human Resource Management Journal, 24(1), pp.111-128.

Schenkel, A. and Teigland, R. (2016). Why doesn’t downsizing deliver? A multi-level model integrating downsizing, social capital, dynamic capabilities, and firm performance. The International Journal of Human Resource Management, pp.1-43.

Wankel, C. and Stachowicz-Stanusch, A. (2012). Handbook of research on teaching ethics in business and management education. 1st ed. Hershey, Pa.: IGI Global (701 E. Chocolate Avenue, Hershey, Pennsylvania, 17033, USA).



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