ETHICAL DOWNSIZING: PROTECT YOUR REPUTATION DURING LAYOFFS
It seems you can't open a newspaper these days without reading another article about this dot-com or that tech company going through a "downsizing", a kinder euphemism for layoffs. What has been most troubling to me as a business ethics specialist, however, is not the layoffs themselves (after all this is a free economy and no one is guaranteed a job.) The truly disturbing news has been about the way some early-stage companies are letting go of employees.

The New York Times reports that the unlucky employees of fob Inc. received a bloodless e-mail informing them of their demise. Some employees of New York Times Digital learned of their fate in The New York Times itself. Dot.coms from Boston to Silicon Alley to San Francisco have behaved thoughtlessly and, yes, unethically as they frantically scrambled to salvage their companies.

No Policies, but Plenty of Soda and Snacks
What strikes me about these poorly handled layoffs is that many dot-coms went out of business the way they went into business: haphazardly, brashly, without a long-term plan.

Companies that were built around an exit strategy, not a vision, had no time to build a set of values and had no way, therefore, to apply corporate values to their decision making.
The concept of "doing the right thing" when downsizing didn't resonate with organizations that flew by the seat of their pants, without policies and procedures, HR manuals, and so on.

Unfortunately, it's too late for many young companies to do the right thing when handling layoffs. But those that are contemplating downsizing should consider this: Every action you take should be consistent with your values. If showing respect is something valued during good times, it becomes particularly important during the bad.

If open communication is a corporate value, it becomes more important during a downsizing.

How are you telling the laid-off employees? How are you communicating to your stakeholders--the community, the shareholders? What are you telling the staff that stays and how are you saying it?

How a company treats the people who are leaving sends a strong message about how it will treat the people who are staying.

That advice holds true for outside stakeholders as well. If I were a potential vendor reading about unethical or poorly handled lay-offs, I would be wary about extending credit to that company. Likewise with current or potential investors.

How a company treats downsized employees has an impact on a business' reputation, and affects investors' assessments of whether financial support is warranted.

Research data supports the assumption that "doing the right thing" has a positive impact on stakeholders. According to the organization Business for Social Responsibility, a 1999 DePaul University study of 300 large companies found that firms making an explicit commitment to follow an ethics code provided more than twice the value to shareholders than companies that did not.

Never too Late to Put Your Values to Work
Building a values-based culture is never more critical than when you go through a crisis. For companies that want to do the right thing, here are some tips on building a culture that is consistent with corporate values.

• Ask yourself, "What is the current corporate culture and how far is it from where we want the culture to be?" What are your values, where are you today, and what steps can you take to close that gap?
• Every company has a culture and values. The questions to ask are: have they been articulated; and, have your employees been asked to participate in articulating the behaviors that reflect those values? It is essential to get employees to buy in.
• Spell out how you're going to achieve your strategic goals. What is expected from all stakeholders to reach those goals?

Few emerging tech companies have a code of conduct or training programs like larger organizations do.

You need to focus on ethical work process behaviors--i.e. how will we work with vendors? What are our competitive intelligence standards? Ultimately, you'll find yourself with a code of conduct for the company.

I don't want to give the impression that all "new economy" companies have handled downsizing poorly, it should be noted that several have conducted highly ethical closings.

Acting ethically during difficult times is a true test of a company's mettle. If an organization can do the right thing during a lay-off, it will reap the rewards for years to come with all of its stakeholders.

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