Downsizing: Fiduciary and Great Harm

Topics: Fiduciary, Layoff, Termination of employment Pages: 3 (962 words) Published: December 19, 2010
There is a well known issue in corporations when it comes down to downsizing. Corporate downsizing is that act of corporations cutting workers usually by closing whole plants or divisions to increase profits. This practice is often used today and is thought by some to be a moral practice to improve economy overall. On the other hand, some think that it causes the workers great suffrage from unemployment, which leads to loss of homes, depression, and crimes. Furthermore, it affects the economy by the decrease in money flow.  Many believe that the people who invest their money in the corporation (shareholders) deserve to have the most interest from the managers to maximize their profits. One method of maximizing their profits is to downsize workers. Some people have a problem with that because they believe that the employees being cut at the expense of maximizing profits for the shareholder is morally wrong. John Orlando thinks that downsizing is often wrong. In his article, The Ethics of Corporate Downsizing, he gives both sides of the argument for downsizing then tells how to apply his finding in real corporations.

Orlando's argument is that downsizing is wrong most of the time. For example, he argues that shareholders do not and should not hold more interest from managers then the employees. He goes on to say that they should be treated equal, so downsizing is only right if both sides (shareholders and employees) accept the action. Also, he says downsizing is justified if only it is done as a means to save the corporation and it is not right as a means of just extra profits. He defends the workers who have been laid off because of downsizing by saying that they are heavily affected by loss of income, property, and some even commit suicide. An argument that he addresses for shareholders is that they are legal owners that have property rights to dispose property as they please. Orlando counters that by saying property rights don’t match with...
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