Clipped from: https://www.deccanherald.com/opinion/in-perspective/fired-for-a-few-dollars-more-1187330.html
From a utilitarianism point of view, a CEO has to consider the impact of his or her decisions on the well-being of all the stakeholders as a whole
The Alphabet Workers Union (AWU) has criticised the company’s decision to lay off employees, saying that this is unacceptable behaviour for a company that made $17 billion in profits during the last quarter alone. Alphabet is the parent company of Google. To make it simple, Google earns a profit of about Rs 1 crore per minute. Yet Google decided to cut jobs to add a few more dollars to its profits. “It is appalling that our jobs are first on the chopping block so shareholders can see a few more points in a chart next quarter,” the union said.
Google has joined hands in the mass layoff race with its mega peers, Meta and Microsoft, which have announced layoffs in the past couple of months. Google’s move to fire 12,000 employees (or 6 per cent of its total workforce) has shocked the affected employees and the tech world.
Also Read: Every one in four Indian concerned about threat of job layoff: Survey
One of the major reasons for the current mass layoffs at big tech companies stems from over-hiring during the pandemic.
During the peak of Covid-19 outbreak, many economies imposed strict lockdowns, resulting in people spending more time online. The tech companies were bullish about the trend and over-hired workers to expand operations.
In an email to employees, Google CEO Sundar Pichai said he was deeply sorry for the move and took full responsibility for the decisions that led the company to this position.
However, this moral posturing has not gone down well with the affected employees, who said if Pichai was responsible for the decisions, then why should he not step down in the first place?
Google’s mass layoffs appeared to be structural, rather than performance-based or selective. As per the social media posts of some of the affected employees of Google, they feel employees are “disposable” for big tech companies. No sentiments, please!
A woman employee who was just about to go for her maternity leave shared an account of how she dealt with the news that she was one of the employees
who was impacted by the layoff at Google.
Layoffs have become a way of life globally, particularly in big tech companies and start-ups. Companies justify pink slips on the grounds that business is down in recessionary times and they are, therefore, forced to take some unpleasant decisions to remain afloat.
Also Read: US layoffs hit two-year high in January
While some companies are laying off employees to stay afloat, others are just attempting cost reductions by firing existing employees and hiring new ones at much lower salaries later. Perhaps AI will fill some of the roles of sacked employees!
Google belongs to the second category of companies. Google is a hugely profitable company and can surely afford to retain all its employees. Is it ethical to throw out employees who have invested their lives in the company at such short notice for the sake of maximising investor wealth and improving company share prices?
It is, of course, a difficult question. Today’s managers are sensitised to their responsibility towards multiple stakeholders, not just shareholders alone.
Consequentialism is a theory that says whether something is good or bad depends on its outcomes. An action that brings about more benefit than harm is good, while one that causes more harm than benefit is not. The most famous version of this theory is utilitarianism. Utilitarianism suggests that an action is ethically right if it adds to the long-term happiness of all the persons taken together.
From a utilitarianism point of view, a CEO has to consider the impact of his or her decisions on the well-being of all the stakeholders as a whole. While lower profits may reduce shareholder value in the short term, the cost of job losses to affected employees and their families will be enormous and may leave them with lifelong scars.
However, scenarios can vary: while senior executives may have large savings to survive, junior and middle-level employees may be living hand to mouth.
In contrast, investors are rich individuals. In the case of Google, most of the sacked employees are from junior and middle-level cadres, as per media reports.
A utilitarian approach would require the company to calculate the economic and social costs of its layoff decisions, however subjective they may be. From that perspective, Google’s layoffs may not pass the ethical test.
(The writer is an alumnus of IIM-Ahmedabad and a retired corporate professional.)