When the revenue drops firms decides to downsize the staff in order to reduce the cost. But the organizations need to consider the ethical issues before deciding on downsizing. The company morale starts dropping once they decide to cut down the employees and other employees also faces problems due to uncertainty and lack of job security. The employees would not prefer to continue in such companies and highly skilled employees may leave the company. When the companies downsize the employees without prior information, it affects the company’s obligation towards society that includes the affected families as well as the related communities. The job cut affect the entire society in which the company operates and the company has some duty towards the society to ensure peaceful living. Sometimes they forget their duties while downsizing and it becomes a social contract issue. The reputation of the company is affected among the public and the society consider the actions as unethical if the company fails to maintain transparency in their operations. Some companies try to downsize the employees showing as performance issues without communicating the exact issues and later results into law suits related to wrongful termination.
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