Question

“The Downside of Downsizing”

 

A moderate-sized consulting company is going through tough times during the Covid-19 Crisis. As a result, the leadership team is asking managers to make two budget cut proposals for their departments: a 15 percent budget cut that will likely be implemented, and a 30 percent cut that may be implemented depending on the big picture. One of the managers has come to you for advice. She is new to her position and has little experience to draw from. However, it is obvious to her that 90 percent of her budget is personnel and the other 10 percent is overhead and other fixed costs that really can’t be cut in the short term. You told her you’re going to discuss privately with your team and provide her and the manager with a recommendation. The members of her team are as follows:

 

·         Tony Jones: white male, 10 years with the company; has been turning in above- average performance ratings from his annual reviews for the past two years, even though his actual performance has been suffering due to a divorce and other personal issues, including showing up late for work and calling in sick several times a month.

·         Amanda Wiggins: white female, ambitious, 3 years with the company; above- average performer; puts in extra time at work; some of her subordinates have complained about her directness and lack of tact, and have reported angry outbursts; you have informally counseled her in interpersonal communication skills

·         Jorge Gonzalez: Latino, 2 years with the company; he speaks fluent Spanish, has great connections in the Latino business community and has brought in several new clients during the past year; you have rated his work as average due to lack of English communication skills and tardiness

·         Dorothy Henderson: white female, 25 years with the company, average performer; filed a sexual harassment complaint against a different member of the leadership team last year which is now in mediation; she is a friend of the company President and is the first person most people talk to when they call the company; she has an immense amount of institutional knowledge and memory, but she comes across as a bit curt on the phone

·         Wanda Jackson: African-American female, 8 years with company; during formal performance reviews you have rated her as outstanding for the past three years; Dorothy Henderson mentioned on promise of anonymity that Jackson was looking for another job and had in fact applied for one with a competing firm; Wanda often works late, even though she is a salaried employee and does not get overtime pay.

·         Jerry Louder: white male, single parent, 5 years with company; gets his work done but has not brought in any new clients and goes home right at five; Jerry has a lot of experience and even though he does not work late, he always hits the deadlines and his work quality is excellent; he often mentors the younger members of the group

·         Martha Strawser: white female, 1 year with the company, she is putting her husband through college and appears to have much promise – in fact, some members of the leadership team have mentioned that she may be Vice-presidential material once she gains some more experience; she holds and MBA and is outgoing and well- connected in the business community.

 

Please answer the following questions for homework:

 

1.) Prioritize the layoff list. Make notes about your reasoning for each potential layoff.

Make sure to discuss and explain the underlying legal and ethical issues in this situation. What laws must be considered before making this decision?

 

2.) Give your recommendation for both the 15 percent scenario and the 30 percent scenario

 

3.) Now that you have decided which employee(s) to lay off, please explain the macroeconomic effects of layoffs.