Back to Volume 11
	You're fired! By Emmanuel Tchividjian

In Arthur Miller's Death of a Salesman, Willy Loman expresses quite dramatically the feelings that being fired can cause when he says, "The woods are burning, boys, you understand? There's a big blaze going on all around. I was fired today." That experience even started his downfall that ultimately led to his suicide.

The psychological impact on someone who has been let go is significant. Some react with anger and anguish, others with guilt, feelings of low self-esteem, and humiliation. Getting fired may imply that you are not good enough. One young Ruder-Finn trainee was too ashamed to tell his mother that he had not been asked to stay on after his internship. For a number of weeks he came to the city every day, pretending that he was still employed.

What is a company's ethical responsibility to its employees? Dismissal of an individual employee and layoffs are rarely discussed in an ethical context. What are the values and conflict of values at stake? Among those values that we should certainly consider are human dignity, compassion, sensitivity, loyalty, as well as the financial health of the company.

Most of us have either been fired or had to let someone go. It is a traumatic experience that remains in one's memory. Yet dismissals are very common. More than one million workers are fired from their jobs each year. It happens at all levels of the corporate hierarchy.

The average tenure of senior executives in Fortune 500 companies is less than 2 years. Louis Uchitelle, the economist writer and columnist for the New York Times, recently wrote The Disposable American: Layoffs and Their Consequences (Knopf.) He thinks that layoffs are much more acceptable today than they were a few decades ago. In the past they were "a sign of corporate failure and a violation of acceptable business behavior." He does not believe that layoffs can only be measured in economic terms but that we should also think of the cost of emotional damage and the risk of undermining productivity of the remaining employees. Attention should be given to the layoff survivors whose effectiveness and moral might be affected because of the increased workload and the fear that they may be next.

On the individual level, the most common reasons for letting someone go are poor job performance and a negative attitude. Management should make sure that the performance evaluation is fair and that the set goals are realistic. An employer should also consider that a poor performance and a negative attitude could be explained by some special temporary circumstances in the employee's life, such as a death in the family or a health problem.

An employee should be given ample warning that his or her performance does not meet the expectation of the employer. Cathleen Graham, the head of HR and Recruitment at Ruder-Finn says that, "it is important for managers to give constant and meaningful feedback, so that the employee has every chance to strengthen his or her performance and turn around a bad cycle, before it comes to a termination."

There are economical reasons for layoffs when a company has to reduce costs in order to make a profit or even to survive. A company has a responsibility to all its stakeholders, not only to its employees.

Professor John Houlihan, of the University of Southern Maine, says that "the public considers layoffs at struggling companies an appropriate decision that can protect the remaining jobs and the businesses themselves. However," he adds, "the one thing I would like to see corporations be aware of is that people are a different resource than the other resources of production." Harry Van Buren, who works with the Episcopal Church and teaches business at the University of Northern Iowa, says that a company should take into account personal considerations when deciding whom to let go, such as children in college, out-of-work spouses, and aging parents.

Dr. Tamari, former chief economist of the Office of the Governor of the Bank of Israel and founder of the Center for Business Ethics and Social Responsibility, believes that in Judaism there are no obligations for the employer to provide life-time employment irrespective of the economic conditions that prevail because it would also require the employee to surrender his freedom to find another place of employment. However, he also thinks that there is a moral obligation for the employer to assist his employees about to be let go as an act of charity.

"After all," he says, "charity always constitutes a reduction of profits retained by the giver." It is interesting to note that the Hebrew word for charity, "tsedaka," translates into "justice." He therefore encourages companies to assist their employees in measures that have marginal cost for the company but are substantial for the recipients.

The issue of loyalty and trust plays a significant role in any relationship, including in the work place. Often employees provide more than just skills and time but offer loyalty and dedication to the company. The employees are entitled to some consideration and care.

However loyalty is a two-way street. The employer is also entitled to loyalty from employees who wish to move on. Whether the employee is unhappy at work or whether there are better opportunities elsewhere, he or she should inform the employer before making the final decision. There is always the possibility that conditions can be remedied to accommodate the employee. An open channel of communication between the management and staff is beneficial to all parties. Once the decision is final, the departing employee should give the employer enough time to find a replacement, and possibly event assist in training the new employee.

When a company fires an employee, more than one person is affected. The individual's family and friends, and in some cases the local community are implicated. Loss of security and entering a phase of profound changes puts stress on all aspects of someone's life.

The company's layoff and dismissal policies can a have a significant impact on a company's reputation. Former employees do not just disappear. They eventually find other jobs and most likely will be working for a competitor. Word of mouth, particularly when it comes from credible sources, has a strong impact. The dismissed have much credibility in the stories they tell their families and friends because it happened to them. Batia Wiensenfeld, Ph.D. of New York University's Stern School of Business, says, "If employees aren't treated with decency and respect in a layoff, the company's reputation is besmirched in many eyes. Not only does it hurt victims and survivors, but if affects customers and suppliers," People might even question whether a company that does a poor job firing its employees does a good job managing them. A mismanaged dismissal may also cause future problems in hiring.

Avoiding a lawsuit is always a concern when laying off employees. A recent study published in the Journal of Applied Psychology, conducted by Professor Robert Bies, Ph.D. of Georgetown University, found that the very aloofness intended to prevent lawsuits increases the chances of litigation. In a survey of 435 employees that had filed complaints with the EEOC, he found that the more people blamed their company or supervisor for a job loss and the less supported they felt, the more inclined they were to pursue a lawsuit.

There are alternatives to downsizing. Some companies have imposed a 10% salary reduction, including the salaries of top management. Others have installed a reduced work week or reduced workload plans.

The Lincoln Electric Company, the world's largest manufacturer of arc-welding equipment, has had a very progressive employment policy since its founding in 1895. They were the first in the nation to offer paid vacations and a stock ownership plan to their employees. Since 1958, the company had a guaranteed employment policy for 30-houra- week workers with at least 3 years of service.

In the 1980s, the company went through serious hardship, with sales dropping 40%. During these difficult times, not one of the employees was laid off because of lack of work. The company went to 30-hour work weeks and transferred employees when jobs were eliminated. Former president Donald F. Hastings believes that "layoffs is definitely an ethics issue, our philosophy is based on the Golden Rule. We would feel really concerned about people being put out on the street. We feel responsible for the people we hire." The company has been profitable ever since its beginning more than 110 years ago.

Doing it Right

There are a number of things that the employer can do to alleviate the trauma of termination.

Pink slips, e-mail dismissals, or even a short meeting with the head of HR can be very damaging. It would be far better if a senior executive would take on that responsibility. It will make the employee feel that he or she was important enough for a senior person to take the time to speak with him or her directly.

The explanation that is given for termination is also crucial. Sometimes the best explanation is that the job is not a good fit for the employee, that he or she may have skills that are not utilized or appreciated in the present job, and that those skills would be of better use in another job. It is never appropriate for the terminating manager to discuss the terms of the termination with the remaining employees. That details of what should be a private conversation should remain private, as part of an ethical standard all managers, no matter the industry, should uphold.

Roz Safrin, who was in charge of Human Resources at Ruder-Finn for over 30 years, handled it beautifully. She would explain to the departing employee that by remaining, he or she would not be given the opportunity to grow and be promoted. She explained that Ruder-Finn would really be doing them a disservice by keeping them on. It was not rare for an employee to send her flowers and a card after they had left, to thank her for the humane way their dismissal was handled.

Sometimes, however, it is important that the truth be told, gently, about the employees' deficiencies to allow the individual to learn from the experience and improve in the future.

A severance package can make an important difference, not only in the direct financial help it provides but also in the message that it sends, that the company wants to do the best it can for the departing employee.

Ford Motor Company decided recently to lay off 75,000 of its employees, as the U.S. auto industry is going through a major financial crisis. It is offering its employees a number of alternative packages, such as a cash payment of $35,000 with full retiree benefits for employees with at least 30 years of service. Younger workers are offered a $100,000 cash payment, but must abandon all other benefits. Ford is also offering to pay full tuition to workers that wish to go to college while retaining 50% of their salary and full medical benefits.

Assistance given in the search for a new job, including help in resume writing, and letters of recommendation is also of great practical and moral value. It is not uncommon at Ruder-Finn to allow a departing employee to keep a phone line, an email address, and even office space for a reasonable time, to allow him or her to find another job.

An exit interview can also be helpful in showing the departing employee that management cares about his or her views about the company and their experience. Exit interviews are also beneficial for the company. Roy Snell, CEO of the Society of Corporate Compliance and Ethics (Minneapolis), believes that "it is foolish not to take the little time required to perform exit interviews and find out if there are any problems that have either not been shared or not been resolved properly. It is actually a form of insurance that gives the organization every opportunity to correct its own problems."

In some rare occasions, when it is anticipated that the employee will have an aggressive and possibly destructive reaction, he or she is let go on the spot and escorted out of the office. It was reported by the Institute for Global Ethics that a recent study funded by the Department of Homeland Security and conducted by researchers at Carnegie Mellon University found that revenge for perceived missed promotions or layoffs is the most frequent motivation of workers who sabotage their company's computer network. The damages resulting ranged from less than $20,000 to more than $10 million.

A few years ago it was discovered that a senior employee was sending a competitor agency some crucial and sensitive company documents. When confronted with her actions, the employee just said, "Okay," picked up her bag, and walked out the door!

A few years ago we found out that one of our employees had been involved in an insiders trading scheme while working at a previous company. The story was in the press and it was an embarrassment for the firm. Ethics is very much part of our culture and image and insiders trading is not only unethical but illegal as well. The Executive Committee had a discussion as to whether we should let him go. Some were in favor of dismissing him. The question was raised whether the person could be trusted at all.

David Finn refused to fire him for three reasons. He said it was wrong to let someone go because it was good for our image. Secondly, since the employee was going through a personal difficult time, we should not add to his burdens by firing him then. Finally, he asked: "What about the concept of forgiveness?" That concept is definitely not one that is current in corporate America today!

Sometimes, being let go is a good thing, although it is difficult to see it that way at the time. Being given new challenges keeps us from becoming too complacent. Steve Jobs, who was fired from Apple a few year ago, said: "I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life."

Other very famous people such as Albert Einstein, Michael Bloomberg, and Larry King were fired at one time in their lives. It did not, however, keep them from becoming very successful.