Paper Example. Key Ethical Issue

The key ethical issue for American Clothing Company is whether it is acceptable to treat employees as expendable resources to maintain their profitability. The company is heading into a slack sales period, and it is bound to find itself with a lot of extra labor force. They cannot afford to continue paying workers during the low season, as it will compromise the company’s financial stability. However, laying off the extra labor force might communicate a wrong message to the rest of the employees. They offered a promise to their employees by considering them as valued partners. However, laying them off goes against that philosophy, as it shows the rest of the workforce that they are a disposable resource that can be fired and hired whenever the company deems fit.

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The issue of whether to lay off some workers is an ethical issue because the company has a little economic incentive to keep all their workers on payroll other than for moral reasons. As a business, the main reason for their existence is profit-making, but keeping all the workers on payroll goes against that principle, primarily because they are paid for the work done rather than the time spent. It is a case of whether to prioritize profits over humanity.

Critical Stakeholders

The two critical stakeholders in the company are the employees and the company’s shareholders. Unfortunately, in this scenario, the interests of the two are not precisely aligned. For the employees, the mass layoff will affect them because they will lose their livelihoods. Many of the workers have lost their jobs elsewhere during the slow season, and they were hoping that the American Clothing Company offers a different fate based on their policy regarding employees as partners. So, during high season, the sewers have much work, which translates to better pay for them. However, during the slow season, they get little pay, and that translates to lower pay. In the worst-case scenario that the company lays some of them off to prevent losses, they become the most negatively affected.

The shareholders are affected by getting more profits when the demand is high and reduced income during slow seasons. It is, therefore, in the best interest of the shareholders that the company remains profitable regardless of the season. One way for the company to ensure they remain profitable is by laying off some workers so that their expenditures do not outweigh the investment made into producing the clothes. The current ethical dilemma that the company faces pits the interests of the shareholders against those of the employees. If the interests of the employees are prioritized, the shareholders lose money, and if the interests of the shareholders take priority, then the employees lose their livelihoods.

Facts in the Case

The two main facts in the case are:

1. The company’s revenues will decrease during the next twenty weeks.
2. The workers can only earn as much as they produce.

It is a fact that the company will revenue will decrease because of the low demand during winter months. It affects the ethical dilemma in that they need to balance their books. With low revenues, they need to reduce the production costs to prevent going into losses. Reducing employee wages reduces the production costs and can prevent the company from making losses. However, choosing to keep all the workers on the payroll will mean they will have lower revenues, but the costs of production will have remained the same.

It is also a fact that the workers can only earn as much as they produce because they are paid based on their work, rather than the time they spend. That means that an employee that spends 8 hours of their day at the factory and only makes two apparel is no different from the one that spent one hour and made the same number of pieces. Therefore, this affects the company’s ability to pay its workers during the slow season because some of their workers will not be producing any pieces. That is why the company is feeling the need to lay off some of the workers. The demand that they are expecting in the next twenty weeks is too low to maintain 3000 full-time sewers.

Option

The recommended option for the company is to move all the workers from a full-time employment basis to part-time. Get the sewers to report to work in smaller shifts on different days of the week so that everyone has something to do. The part-time work schedule will solve the ethical dilemma because of the following reasons:

Adjusting their work schedules will allow for flexible working hours and work distribution. Since the workers are being paid for their work, they can have them work in smaller shifts so that every employee gets to make a few pieces at different times to earn an income. Having them on fulltime forces them to spend 8 hours at work even when there is little demand for their labor.

The flexible work schedules allow the company to decrease the wages of all the workers hence preventing some of them from losing their jobs. Since it is a slow season, it is unlikely that they will find a job anywhere else. Placing them on part-time ensures that they, at least, get to keep their job.

The part-time work schedule ensures that the company does not make losses due to a high wage burden. Every coin will be paid to the employees will be one that comes from sales, hence ensuring that the company maintains a profitable business. Furthermore, during high season, they would need to hire and train other people.

Defending the Option

Based on the core values, the proposed option meets the following core values:

• Dependable – It is a simple procedure that requires the use of available resources.
• The strategy can be used on a long-term basis.
• Loyalty – It demonstrates the company’s philosophy of treating workers as valued partners.
• It builds trust and loyalty from the workers.
• Honesty – It is an honest attempt to prevent laying off their employees.
• It adheres to honesty because the company gets to keep its promise to its workers.
• Efficient – The option does not require any significant changes in the organizational structure.
• Removes the extra cost of having to hire and train other employees during the next high season.

In regards to Kant’s ethics, the option is not a means to an end. The other alternatives would be considered as the means to an end. Second, both the company and the employees have little to gain from the option, but instead, avoid losing. As for justice, the option meets the three principles of justice, which are equity, equality, and need.

Equity – The dilemma would have placed the employees at a disadvantage. However, the proposed option ensures that the employees get something at the end of the day.

The option also ensures that shareholders from suffering losses due to extra expenditures.

Equality – All workers are placed on a part-time schedule, ensuring that everyone gets the same kind of treatment.

All stakeholders involved get to benefit from the option.

Need – The option meets the needs of the shareholders as they do not have to pay people for doing anything.

The option meets the employees’ needs as all of them get to retain their job.

Finally, the option meets the standards of moral rights. People have a moral right to pursue happiness. The proposed option gives shareholders the opportunity and right to protect themselves from loss by placing their employees on a part-time schedule. Second, the option also gives the employees to continue working or look for another job, hence promote their happiness.