c. 1997 Religion News Service

(Tom Ehrich is an Episcopal priest in Winston-Salem, N.C., an author and former Wall Street Journal reporter. E-mail him at journey(at)interpath.com).

UNDATED _”Did you know my position was impacted by recent layoffs?”a friend asks.

No, I didn’t. I knew of cuts at his company, but I hadn’t heard the net caught him. I can imagine his deflation after years of loyal service, as well as the turmoil his family faces.

Now what? The question reverberates across the American economy, as cutting payroll has become management’s frontline strategy for improving profitability. These ongoing waves of layoffs raise important ethical questions.

Employers come and go, of course, as industries fade, as poor decisions are made, as bad luck cripples results, and as stronger competitors arise. No one is surprised that the makers of hats and trolleys need fewer workers. And in volatile industries such as computers or advertising, the strong can collapse overnight.

Many layoffs, however, seem less understandable, guided mostly by lagging stock prices rather than by excess staffing. What’s the fastest way to improve return on investment and bump the stock price? Not research, new equipment or on-time production, but a reduced head count.

Other layoffs derive from mergers that seem driven specifically by a promise of reduced employment. When a large bank acquires a smaller bank, for example, the rationale tends to be: We’ll buy their market and deposits but jettison their employees.

Some layoffs originate in managerial ego, like the slash-and-burn executives who build lucrative careers by downsizing businesses.

I realize some business leaders may be on ethical overload, forced to consider environmental impact, workforce diversity, sexual issues, safety issues, and vast regulatory requirements. But the ethics of employment must be taken seriously, too.

A public company serves three interests: its stockholders, the communities in which it has operations, and its employees.

Those three interests ought to be in balance, but in fact, the needs of stockholders tend to prevail. If those shareholders are people who have actually invested funds in the building of the business, it might make sense to put their needs first. But most public companies were built long ago. What an investor buys today isn’t an interest in, say, making telephones, but access to the stock market as a place to grow money.

Investors don’t visit factories, talk to workers, or consider the company’s place in community life. A company is a stock symbol, a poker hand that might win. Its only value to the investor is an upward-trending stock price.

What about the communities that depend on an employer? Across America, communities have dug deep to help employers start and stay in business. They provide tax incentives, wink at environmental damage, build roads and schools, and adapt land usage and residential patterns to a company’s needs.

Yes, the community gets some payback in property taxes. But the primary payback, which makes the sacrifices worthwhile, is jobs. When a company trims jobs to serve far-away stockholders, it violates its covenant with the community.

And what about the hired hands? Companies preach team spirit, demand loyalty and expect non-compensated overtime. When they give little commitment in return, however, they abuse loyalty already granted and discourage future loyalty.

It isn’t a matter of managers needing to become soft-hearted. Ethics aren’t about suspending wisdom. The thing about ethics is that when responsible ethics are in place, human enterprises work better. Poor ethics corrode the enterprise.

Among employees, for example, the cost of non-loyalty is high. Morale drops and younger workers see job-hopping as a way of life. The long-term cost of constantly hiring and training new workers could undo short-term gains from layoffs.

When layoffs happen, trust fades. Disparities in pay become nettlesome, as executives are perceived as protecting their high salaries by laying off the lower-salaried workers. Work spread over too few workers heightens stress. And even those who keep their jobs start updating their resumes.

As with all ethics, this isn’t a black-and-white issue. Some companies must trim payrolls just to survive. Some are carrying bloated workforces like the layabouts in the Dilbert comic strips.

But even when justified, layoffs send shock waves through families and communities. And where they seem merely convenient, layoffs undermine trust and confidence, two foundations of a healthy society.

END EHRICH