To fire or not to fire – the ethics of the layoff
The problem of what to do with an underused employee presents ethical quandaries for one small business owner.
Sam Margolin, Philadelphia, Pa.
I have a service technician, but due to the business environment we have been receiving very few service calls and the service department is not bringing in enough money to support him. I hate to pay my technician for sitting around all day. Do you have ideas on how I can make better use of my technician?
By Paul Roberts, Fortune Small Business contributor
Dear Sam: The problem you describe is one that’s common to small-business owners, and it’s as much of an ethical dilemma as a practical one: You’ve hired a skilled employee to help your company, but find that there’s not enough business to justify his position. Your choices are straightforward: let this employee go or find something else for him to do within your company.
The answers to those questions, however, are hardly straight forward, says James Hoopes, the Murata Professor of Ethics in Business at Babson College in Wellesley, Mass.
“People tend not to understand the complexity of the issues involved,” Hoopes says. “There’s this idea that the marketplace solves all the ethical issues, and it’s just not true at all.”
After all, firing your technician may be the right move, from a business standpoint. However, there are strong reasons not to: a good technician can be hard to find, and you may want his services should business pick up again. On a more personal basis, getting laid off could have a severe affect on your employee and his family. Such considerations are a good application of what Hoopes thinks of as “character” or “virtue ethics” – the idea that the right thing for to do is the one that develops your character in the best possible way.
Simply finding make-work jobs for this individual at your company isn’t entirely satisfactory either. That’s especially true if his services are in demand. In that case, you’re depriving him of the ability to use his skills elsewhere, and depriving the market (and another company) of his talents. Hoopes defines that way of looking at the problem as an application of “consequence” or “utilitarian ethics,” which say the right thing to do is the one that produces the greatest good for the greatest number.
What’s the right thing to do?
“It’s a judgment call,” Hoopes says. “If the serviceman would have trouble finding work elsewhere and the employer can find alternative profitable work for the man within the company, it’s probably best to decide in favor of ‘character’ by keeping the serviceman on. But if the serviceman could readily find another job and the employer hasn’t really got alternative work for him in the company, the utilitarian ‘consequences’ may be best for everyone if the employee is let go.
Of course, small-business owners don’t always have the luxury of weighing ethical quandaries. If keeping this employee on jeopardizes the financial health of your company and the security of the other workers you employ, you may have no choice but to eliminate the position.
Should that happen, Hoopes says that an employer’s ethical responsibilities don’t stop at the front door of the building. Weighing your duty to your former employee may make a big difference in how you fire them, should it come to that.
“[The idea] is always to treat other people not merely as means to our own ends but as ends in themselves,” Hoopes says. Instead of merely saying “Sorry, I don’t need you anymore,” employers can help the employee find a new job, assist with retraining for a different profession, or by pay severance when the employee leaves.
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DiggI work in a field with service techs and due to haveing too many being paid too much I along with other office workers were layed off and the techs were kept but that was actually a smart move on the employers part I guess due to the company was afraid if they cut the service techs these skilled techs would go to work for the competition and take the customers he services with him so I guess you should weigh that into affect also .
That’s not necessarily true. Lots of large companies have lots of dead weight.
Big companies don’t think of any of this touchy-feely things before they layoff people. Microsoft-Excel says we need to RIF 2000 employees, then they go and get the blacklisted individuals list out and go from there.
Free market economy, fire the guy and allow this resource to be reallocated into a more productive place.
A better answer would be to engage the employee in coming up with a solution; perhaps changing him over to contract basis work to reduce some of your risk and give him the opportunity to find employment or additional contract work elsewhere to fill his downtime. He is likely to appreciate that much more than an abrupt termination, and if work picks up in the future you could then return him to full status. When he is out on site with a customer does he have the ability to sell additional products and services of your company? That might be a way for him to make up for lost income, and be a win-win situation for both of you.
It should be noted that letting the technician go would be an application of utilitarian ethics if it were done because the company would otherwise be unable to keep providing jobs for the other employees. For example, if keeping the technician on the payroll results in bankrupting the company, the sales staff, receptionist, etc. are also now out of a job.
Letting an employee go is always a difficult decision and task to make. As the Managing Partner of Net-Flow Solutions, we have been blessed by not having to face that type of decision since we opened the business in 2005. However, as a former IT Director, and as a consultant, I have been faced with making and advising on this decision in the past. For larger corporations, where there are thousands of employees, typically downsizing is a numbers game and there are typically (or at least with my experience) decent severance packages to those being forced to leave the company. However, for the smaller business when faced with the decision to cut someone, it is always much harder because it is more personal. Typically, as the owner of the business, you know the person you are letting go as well as his family. You have met the spouse and kids at company outings or you have talked about such things in passing.
My advice would be to first have that discussion; this is what is happening… 3 to 6 months we are going to move you from salary to an hourly rate where you will be working part time for us on an as-needed basis and this is why. During your downtime, you will want that employee to be free to start searching for another job. However, you may want to challenge that person, is there something else within the company that he/she may want to do for you. Can they do some inside sales? What about outside sales?
Let me expand on that last topic some to show creating opportunities, at Net-Flow Solutions (www.net-flowsolutions.com) I originally hired a network engineer to do service calls and to take up some slack in the initial days to do inside sales to help my existing sales manager. This individual started with the phone book and within a week had 4-5 leads for the sales manager, and each week for a month, had the same stats. However, the sales manager just wasn’t closing the deals. So this network engineer, who also did inside sales, asked if he could try to do an onsite sales call that he setup. The first one he closed. Today, he isn’t a network engineer; instead he is my VP of Sales. This week alone he was responsible for closing 6 new clients for Managed Services and 3 Online Backup/DR solutions.
So what am I trying to tell you, perhaps there are other things that your service technician can help you with that you might not have tried and perhaps he doesn’t know his own potential.
Regards
Mike Holland
Managing Partner
Net-Flow Solutions
http://www.net-flowsolutions.com
The best solytion i can think is to talk with him and tell him that you have in your mind to fire him.give him time to find another job and when he did fire him.make him believe that you will not fire him until he find a new job
From the question I am unable to understand what type of business Mr Sam Margolin is doing? I asked this question simply because marketing strategy will differ from products to products.
If this was a large company, the person would be let go.
I would explain to him my delimia and my desire to contiue using his services. After that, I would let him go as a full time employee but advise him I would like to keep his services as a contractor that only gets paid for his service calls.
Framing the problem here in terms of virtue ethics and utilitarianism does little to resolve the underlying issue. I would recommend discussing the matter in a frank and open way with the employee, offering to keep him on for a limited time (say, three to six months), and letting him know that he is welcome to use his free time on the job to look for a new job. This will allow the business to avoid a financial burden, and it will allow the employee to transition to a new position in a supportive and relatively stress-free way.
That’s especially true if his services are in demand. In that case, you’re depriving him of the ability to use his skills elsewhere, and depriving the market (and another company) of his talents.
I don’t buy this arguement at all: it’s a tough market to find skilled workers. If you let this employee go to another company, where will you find his skilled replacement? The “depriving the market” thesis is b.s.
I think Professor Hoopes makes some excellent points, but I think he is missing a relatively simple solution. Talk to the technician and explain the situation. Ask the individual if they can think of any ways to increase the business in that area. They may be marketing they could do, or they may be able help the owner identify new business opportunites. At the very least if the person has to be let go, they will understand the economics of the situation and will realize it is not a personal issue.
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The issue of under utilized staff reflects negatively on management. In the question, I noted that there is only one tech at this small business. I doubt the manager can let them go and fullfill their current client needs. He needs more clients, not less tech.