Maintaining Employee Ethics During Downsizing

The management of Newell’s organization is facing an ethical issue regarding how maintain the ethics of treating employees fairly and equitably while downsizing. As illustrated in the case, Newell has been regarded as an excellent place to work by its employees within the surrounding communities. “Employees’ moral and loyalty is always high, and the job satisfaction studies conducted by the company rate the organization as a fair and equitable place to work” (Snell, Morris & Bohlander, 2015). Arguably, during downsizing, some of the employees must be laid off. The process of laying off employees has several effects on the morale of employees laid off, employees left in the organization, and the general organization performance. It is noted that after laying off some of the employees, the remaining employees may have low self-esteem and morale to execute their tasks ("(PDF) Strategy of downsizing process and its effect on survivors and organization," 2018) . Thus, an organization may significantly incur poor performance rates. Newell organization is therefore in a dilemma, and needs to establish the best process of laying off employees while ensuring that the morale of the laid off employees and that of the retained employees is not affected. Besides, the positive organizational reputation Newell has built over time should not be erased due to unfair process of laying off employees. 

There are many problems that Newell might face in its downsizing decision. First, Newell might not be able to improve its effectiveness, efficiency, productivity and profitability after laying off some of its employees. An observation is made that from the experience of downsizing, employees become more associated with a wide range of negative psychological responses ("better, fairer approach to layoffs," 2018) . Such responses are often linked to high rates of turnover, and consequential declines in organizational commitment, job performance and job satisfaction. In other words, downsizing makes employees to become confused about the future organizational plans due to changes in the organization culture, business strategies and business mission. Secondly, Newell may lose its customers to competitors when the downsizing process becomes unsuccessful. When customers realize there is a decline in the levels of customer services and rates of product delivery, they may prefer the other organizations over Newell. 

It is important that Newell considers options that maintains the ethical expectations and limits chances of losses for the organization. First, Newell can consider retaining the experienced staff, and using their expertise in other areas in the organization. From the case, it is observed that in 2011, Newell incurred a total cost of $1.7 million in training new recruited minority employees at the entry level. After employment of the new employees, Newell experienced sharp declines in its sales in both the years 2012 (12%) and 2013 (23%) (Snell, Morris & Bohlander, 2015). Besides, there was a reduction in demands for its products. Arguably, retaining the experienced workers cuts down training costs, and maintains the customers’ trust in a company. The second option Newell can consider is facilitating effective training of the survivor employees on how to manage psychological stress associated with the downsizing. 

In downsizing Norwood facility, I will emphasize on employee retention. The additional costs which the organization may incur in training new personnel can be cut down, and used in other organizational activities such as training the already experienced staff to serve in other departments. In other words, instead of workforce reduction, I would consider organization redesign strategy, which will involve restructuring of tasks, organizational functions, products, hierarchical levels and organization groups. The structure of Norwood is simple and therefore, by redesigning it the organization will improve its efficiency. Besides, I would apply systematic redesign, whereby the culture of the organization will be readjusted. The attitudes and the value for employees will also be improved. 

References 

(PDF) Strategy of downsizing process and its effect on survivors and organization . (2018, October 31). ResearchGate.  https://www.researchgate.net/publication/328626416_Strategy_of_Downsizing_Process_and_Its_Effect_on_Survivors_and_Organization 

A better, fairer approach to layoffs . (2018, May 1). Harvard Business Review.  https://hbr.org/2018/05/layoffs-that-dont-break-your-company 

Snell, S., Morris, S., & Bohlander, G. W. (2015). Managing human resources. Cengage Learning.