Image taken from http://3dprint.com/wp-content/uploads/2014/05/hp-2.jpg
“Hewlett-Packard plans to cut approximately 55000 employees as a means to cut costs.“[1]
In Hewlett-Packard’s mind, this may be a viable strategy to cut long-term cost, as it reduces the labor costs by $2.7 billion annually, which breaks even in just 1 year. But cutting labor costs have significant negative consequences which are not discussed in the article.
By cutting labor costs, it also means there will be a significant fall in output and productivity and may have great consequences(unless marginal cost is above marginal revenue, which is highly unlikely judging from its business model). Its effectiveness as a market strategy can be partly justified, despite its flaws. However, it is clear that such actions are generally unethical. A blog post by Randy Cohen illustrates the ethical counterparts of laying off workers well. “For a company to get through a recession, suffering may be unavoidable, but ethical management means minimizing that hardship, spreading the pain equitably and baring some responsibility for its consequences”[2] illustrates a valid point reflecting the lack of ethics in laying off workers simply to get over the hardships of a company.
HP’s decision can potentially have a catastrophic effect on more than 55000 people’s lives (as it can hurt their family as well) and for a company to make such a decision simply to overcome their hardship is extremely unethical and immoral. HP should instead consider other methods to overcome their problems.
- http://www.bbc.com/news/business-34265094
- http://ethicist.blogs.nytimes.com/2009/05/26/when-layoffs-are-immoral/?_r=0