Performance Appraisal: Business Ethics

The presented case revolves around the topic of the performance appraisal of employees prior to downsizing the organization; it involves Frank, the chief financial officer, and the member of the Executive Committee of the firm, the company’s CEO, and three employees that did not pass the procedure of formal evaluation and, thus, are likely to be fired without even knowing of their poor performance. Naturally, such situation creates a problem that can be addressed by using one of the three following approaches. The first of them involves the so-called laissez-faire policy from the side of Frank. The second approach focuses on speaking against the current policy of the company. Finally, the third approach is based on finding a compromise with the aim to make sure all the sides of the conflict are satisfied with its outcome.

As a result, Frank is facing an ethical dilemma while having to decide whether he should either remain on the side of the CEO and let the things go their way despite the fact that it is quite unethical, or speak for the employees and thus oppose the company’s management, or try to find an alternative solution. Therefore, the following work focuses on the review of all the three mentioned approaches to the ethical dilemma, the definition of their potential consequences both for Frank and the company, and, ultimately, the choice of the most feasible option, namely the one that will result in the satisfaction of all the three sides (the executives, the employees, and Frank himself) involved in the described dilemma.

First Approach: Going with the Flow

The first approach requires minimal input from Frank; in fact, he will have to work as usual without questioning the initiatives of the company’s CEO. It is clear that such a position may be considered quite unethical, especially towards the employees that have not passed the procedure of the formal appraisal and, therefore, will be unaware of the reasons for their dismissal. However, it is possible to provide the evidence that justifies this approach. First of all, Frank’s intrusion may result in the emergence of a conflict of interests; in this situation, his personal interest can affect the decision-making process and, thus, damage the interests of the company (Walton & Henderson, 2005). In particular, a formal appraisal of the remaining three employees may help resolve the dilemma that Frank is facing. However, it will also slow down the process of downsizing and, thus, disrupt strategic plans of the organization. In other words, Frank will neglect the interests of the company in order to achieve moral satisfaction instead. This behavior is unacceptable for a member of the Executive Committee. Moreover, as a chief financial officer, he must understand that under conditions of the ever-changing external environment, even the slightest delay in the course of certain processes that occur within the company may have an adverse effect on its competitiveness and, thus, survivability in a long-term perspective. It should be noted that, at the current stage of the company’s life cycle, the maintenance of the balance of interests is the most important problem to be addressed by its management. In particular, the organizational culture of the firm must take care of the interests of all key stakeholders, including managers and employees. The imbalance in favor of the interests of a particular stakeholder can lead to the failure of the entire downsizing process (Slater, 2012).

Of course, the interests of the mentioned people are likely to be neglected and sacrificed to the long-term stability of the firm, but, considering their ensured financial well-being, the risk that the situation with their dismissal will get out of hand is quite low. Moreover, Frank himself agreed that the long-term health of the business was more important than the interests of any family members (“Performance appraisal: Business ethics,” n. d.). Therefore, he must adhere to this point of view during the entire procedure of downsizing. Otherwise, his behavior may be considered as the sign of inconsistency by the company’s CEO; obviously, this fact will not add to his credibility. In addition, the tone of the CEO during his last conversation with Frank is likely to be an indication that he should stay away from this problem and let things go their way.

As a result, it is possible to say that the consequences of the first scenario are expected to be quite positive; the downsizing will be completed without delays, the financial well-being of the dismissed employees will be ensured (at least in a short-term perspective), and Frank’s career growth will remain unhindered. At the same time, the ethical dilemma mentioned earlier remains unresolved. In turn, this fact may become for Frank a source of the personal dissatisfaction. Moreover, there is a chance that fired employees will also be dissatisfied with the decision of the CEO; their attitude may have negative consequences for the company in a long-term perspective (e.g. soiled reputation).

Second Approach: Against the System

As one can see from the heading, the following approach focuses on changing the situation, by allowing the mentioned three employees pass the same evaluation procedure as the other workers. In this regard, Frank, as well as other executives, will be able to make an unbiased judgment regarding the downsizing of the company and ensure that the fired workers understand the reasons for their dismissal. At the same time, standing against the CEO’s decision may have an adverse effect on Frank’s career in the company and, thus, his financial well-being. Despite being a terrific fit as claimed by the company’s CEO (“Performance appraisal: Business ethics,” n. d.), apparently, he will have to defend his position by providing some arguments regarding the necessity of conducting formal evaluation for the mentioned employees. In this regard, it is possible to provide the following evidence that will justify the position taken by Frank. Those employees that are to be fired must be assessed to make the reason for their dismissal perfectly clear for them. Such a clarification is to be made not only for the company’s CEO and the fired worker but also for remaining employees. In particular, firing people without their actual assessment and explanation may result in the development of a feeling of uncertainty in the company. Each worker may think that he or she may also be fired without any reason. In turn, the working atmosphere is likely to become tense, and this phenomenon does not contribute to the employees’ productivity (Tricker, 2014).

Moreover, Frank may also refer to the mission of the company, namely, caring for its employees, specifically the ones that are producing (“Performance appraisal: Business ethics,” n. d.). In this regard, it is possible to argue that it is impossible to fulfill such a mission without knowing exactly whether employees generate values (in other words, are producing as stated in the case) or not. Therefore, the evaluation of their skills is necessary.

Finally, it is possible to stress out that these employees have worked for the company for longer than the others; in fact, they have been with it almost since the beginning. As a result, they are likely to have a considerable working experience. Given the fact that downsizing of the company is usually carried out with the aim to optimize the costs, it is possible to say that, despite the decrease in the actual number of workers, the costs of the organization may not be lowered. At least it cannot be done in the same proportion as originally anticipated since experienced people left the company. At the same time, knowing that the expected result is not achieved, the leaders will not ask questions about the adequacy of the chosen mechanism for the achievement of the objectives that were set. On the contrary, after achieving a slight decrease in expenses, they will make a decision about another wave of dismissals. They will assert that the cost optimization was inefficient because few people were fired rather than because the wrong way to address the problem of cost optimization was chosen (Slater, 2012).

As a result, it is possible to say that, in the case the mentioned approach is selected, the ethical dilemma will be resolved. In particular, all employees of the company will receive equal treatment in terms of the evaluation of their performance and will know exactly why they are dismissed. Moreover, the process of downsizing will be more efficient. However, speaking against the current policy of the company may result in the dissatisfaction of its executives and, thus, undermine Frank’s reputation. Therefore, in terms of the company’s well-being as a whole, the described approach may be quite feasible. However, there is no guarantee that the executives of the organization, namely, its CEO, will agree with Frank’s viewpoint. As a result, his career and personal well-being will be at risk; thus, the overall feasibility of such approach will decrease.

Alternative Approach: The Communication

The final approach to the described ethical dilemma is based on the establishment of constructive communication between the mentioned employees and company’s executives. It should be noted that the previous two approaches do not take into account the opinion of employees regarding the matter of their evaluation and potential dismissal. Of course, as it was mentioned earlier, the interests of the company are more important than those of an individual employee. However, it was also stated that the dissatisfaction of employees with the policy of the CEO may have a considerable adverse effect on the organization. It is clear that there is a need for a compromise between these two stakeholder groups. Thus, Frank will have to play the role of a mediator between the company’s employees and executives. 

The necessity of such an approach can be justified by the following evidence. First of all, it should be noted that the dismissal of the company’s employee, whether on his/her own or initiative of the CEO is a painful but inevitable process. This event often creates tension in the working team and results in the emergence of rumors and feeling of insecurity; thus, it complicates the overall psychological climate. Therefore, in each case of dismissal, its cause must be stated clearly, and possible consequences must be assessed. After all, each fired employee leaves with a part of the corporate knowledge, know-how, and trade secrets, sometimes (Tricker, 2014). This statement is especially true for those workers that have been in the company for a long time. Moreover, they may develop the feeling of resentment and use their knowledge of the internal affairs against the company. To avoid such a turn of events, it is necessary to interview the employees that may be dismissed and conduct the so-called exit interviews in order to achieve necessary agreements and compromises. Most importantly, it is crucial to take note of the employees’ opinion regarding the appraisal of their performance and the process of downsizing. Moreover, to relieve the tension, one may organize a talk in an informal setting, popularly known as feedback events, as well as meetings while off duty. The information obtained during such bilateral communication will help improve the system of personnel management and production activity of the company (Tricker, 2014).

In addition, the conduction of such interviews can be considered an opportunity to prepare for similar events that may occur in the future. This statement can be justified by the following facts. First of all, the mentioned employees have been with the company almost since the very beginning. As a result, they are quite knowledgeable about the peculiarities of its organizational culture, and executives are well aware of their personal traits, meaning it is easier to negotiate with them. Moreover, potential mistakes during the process of communication with them will not have a significant adverse effect on the relationship between managers and their subordinates (Tricker, 2014).

Therefore, it is possible to say that, in the case the described approach is selected, all three sides involved in the ethical dilemma will be satisfied. On the one hand, employees will know that their opinion on the current evaluation of their performance is taken into account, and, most importantly, their potential dismissal will not be a surprise to them. As a result, there will be no reason for them to conflict with the company’s management, including Frank. Additionally, no damage will be done to the psychological climate of the firm. In turn, Frank will also be satisfied since the dilemma will be resolved and, most importantly, his career growth will remain unhindered. Finally, the company’s executives will be satisfied due to the fact that the organization is better prepared to the processes of downsizing and restructuring, which are always accompanied by rotation and dismissal of the personnel and may occur in the future.

Conclusion

The search for the most feasible solution (the one that results in the satisfaction of all the sides of the conflict) for the ethical dilemma faced by Frank that involves the dismissal of three employees that have not passed the procedure of a formal appraisal and, therefore, are unaware of their shortcomings, has been completed. This process has involved a review of three different approaches to the issue: the laissez-faire policy, the protection of the interests of the employees, and the establishment of constructive communication between the sides of the conflict. By comparing the presented concluding thoughts for each of the presented points of view, it is possible to say that the alternate approach, which results in Frank assuming the role of a mediator between employees and the CEO (namely, taking the neutral position) is the most feasible option in the given situation. First of all, the neutrality of Frank lowers the risk of his career growth being hindered. In addition, employees will know that their opinion has a certain weight for the company; this fact will contribute to their loyalty to it. Finally, the company’s management will obtain an invaluable experience of negotiations with employees, which can be put to use during restructuring or downsizing that may occur in the future. Therefore, all three sides involved in the dilemma will be satisfied, and the problem will be completely resolved.

By summarizing everything said above, it is possible to say that any ethical dilemmas regarding the personnel of the organization are to be addressed with the utmost care. On the contrary to all the other resources of the firm, including material and financial assets, employees are sensitive to such activities as rotation and dismissal, especially in the case they are not aware of these initiatives. As it was demonstrated by the following work, failing to take into account these aspects may have negative consequences for the organization by damaging its reputation and lowering its survivability in a long-term perspective.