Downsizing Dilemmas

Q. If my job is to help increase the profitability of a company, should I try to find ways to restructure the company so as to get by with the fewest number of employees? Should I be trying to fire as many people as possible, or just enough to make the company reasonably profitable? 

A. A manager is basically hired to work on behalf of the business owners. And it is a basic principle of Jewish law and tradition that an employee or agent should do his utmost for his employer. A worker "is required to work with all his strength." A fine example is Yosef, who demonstrated exemplary devotion to the interests of his higher-ups, whether in the house of Potiphar, in the prison, or in the royal palace.

So we might assume that the manager should do everything in his power to cut costs, including slashing jobs to the bare minimum, in order to increase value for the owners. But a broader look at the Jewish sources shows that a more balanced approach is called for.

Jewish tradition recognizes a special responsibility of the employer to consider the welfare of the workers. This doesn't mean that an employer has to hire any particular number of workers or pay any particular wage; on the contrary, the norm in Jewish law is that a worker may be fired at any time for reasonable cause. But it does mean that the welfare of the workers should be considered among the many factors that go into making policy, and this is enough to rule out firing "as many people as possible."

In a famous case, some movers accidentally broke a cask of wine belonging to a prominent Jewish sage. When this sage wanted to sue them for damages, his teacher admonished him that under the circumstances the fair thing to do was to leave the workers alone and even pay them their wages. The workers toil on behalf of the employer, and so the employer has a special responsibility to look after their needs - according to his ability.

The Talmud also teaches us that a manager shouldn't try to bargain a worker down to the lowest possible wage if the owner is willing to pay more.

There are also excellent business reasons to avoid ruthless job cuts. First of all, experience has shown that it is almost impossible to cut the fat without also cutting away some of your organization's muscle.

Second of all, even if you could do away only with superfluous workers, the morale and effectiveness of remaining workers is invariably damaged by layoffs – just as their workload is increased as they take on the responsibilities of dismissed colleagues. This is the so-called "survivor syndrome". But the impact on morale can be reduced if the remaining workers see that the firings were carried out in a thoughtful, equitable, and rational way.

So you should try and adopt a balanced approach. Remember that Yosef realized that it was ultimately in Pharoah's own interest to adopt a humane policy of turning the Egyptian farmers into partners, instead of slaves. (Genesis 47:19-26.)

SOURCES: Shulchan Arukh Choshen Mishpat 337:20; Babylonian Talmud Bava Metzia 83a and 76a.