Sir, as VP of Human Resources, I would advise you to highly reconsider your proposal to reduce incentive payments for salespeople and implementing a month-long layoff for all production workers. Although you are legally within your rights to do so, however from an ethical stand point, reducing incentive payments and laying off some of our lowest paid employees while the higher paid managers are completely un-effected in this cost reduction effort can be considered unethical.
This proposal will be economically devastating to most of our sales and production force and possibly counterproductive to our company itself. If we implement the reduce incentives and layoff as currently proposed, the potential for future complications is highly probable. We face the likeliness of low employee morale, substandard sales efforts, and the potential loss of other valued employees due to fear off being laid off.
We will also loose of internal and external stakeholder confidence as well as our reputation as an employee friendly company that will hinder future hiring of top applicants. I believe ethical responsibilities are crucial in the workplace because a tough ethical code provides a non-threatening environment with high employee morale, companies that exhibits straightforward ethics tends to show higher production and profits, lower employee issues and it’s just the right thing to do. If you take care of your employees, they will take care of business.
For example, Aaron Feuerstein, CEO of Malden Mills, could have closed his plant after a devastating fire and move it overseas but he pledged to rebuild his plant at the same location and keep the jobs in the local community. But even more surprising, he promised to continue paying his employees and to extend their medical coverage until they could come back to work (Hartman, DesJardins, 2011). I would like to recommend an alternate approach. From a business stand point, in tough times salesmen should be encouraged to bring in more business.
Since the bulk of salesmen’ pay is from commissions along with a small salary, they are not a large part of the overall payroll. I would recommend possibly slightly reducing their salary and increasing their commissions. Production workers are usually the lowest paid employees within a company and would suffer the most financially if laid off for a month. For the production department, I would recommend a hiring freeze and possibly a temporary 10% pay reduction. I would also recommend management employees should not be untouchable.
They make up the bulk of the company’s payroll. I recommend two options; Option one would be a temporary 20% pay reduction across all management, Option two would be to select the least utilized members of management and offer them a severance package of sorts to leave the company. Potential attrition after the pay reduction announcement may occur; however, this may be helpful to reduce staff. We can make adjustments accordingly. References: Hartman L. P, DesJardins J (2011) Business ethics: decision making for personal integrity and social responsibility/2nd ed.