reduction vs. responsibility

Elizabeth was the Vice President of the marketing division of a midsized publishing company. The publicly traded company was beginning to gain market share over some of the industry’s leading companies. Though the company was not experiencing financial losses and did not expect to experience any in the future, Elizabeth and the other company executives were called into the CEO’s office to discuss budget cuts.

Two years ago, the company had a couple of highly publicized contracts fall through. Since those problems, the company had been performing much better, but the CEO, Jack, was eager to quickly regain the stockholders’ confidence. In the meeting, Jack complimented the executives on performance over the past year. Jack expressed confidence that investors would view the company’s upcoming second quarter earnings release as favorable.

However, Jack followed up that praise with some negative news. “I’m impressed with the measures we have implemented lately, but I just think we need to do more. We are a great company, and for this next quarter, I want to just knock it out of the park. I’ve done a little analyzing and have found that our employees, on average, have been performing far better than they were two years ago. The average employee in the sales department, for instance, has increased their sales 35% in just two years. To me, this shows that we have strong commitment from our employees to make this a truly remarkable company.”

He continued, “But I think that everyone could use a bigger push. That’s why I’ve determined that every department will eliminate one job, effective next week. This is great for us in two ways. First, we will obviously save money on that person’s salary. Second, it will push the remaining employees to work even harder. Plus, I really think that our investors will applaud the fact that we are buckling down and starting to really cut our costs.”

Jack, after seeing the look of dismay on many of the attendees’ faces, began to reassure them, “I know this may seem like a hard decision. I’m standing firm on this one, so it’s a decision you’ll just have to make. It would be best for your budget if you looked at your employees and determined which one is relatively the least productive and the highest paid. I’ll be out of town for the next two weeks – I actually have to leave in a minute to catch my flight – but on Friday you need to dismiss one employee and then send me a voice mail letting me know who it was.”

No one had the chance to say anything before Jack left the room. Elizabeth left the room and tried to catch Jack to discuss this decision, but he had already left for his flight. Jack was a stubborn man; Elizabeth knew he would not change his mind once he made a decision. So, she went back to her office to contemplate which employee to let go.

The marketing department had about forty employees. Most of those employees were young, because the department had traditionally been used as a stepping stone into management positions. Elizabeth knew she would not save a lot on the salary of any of these individuals. Plus, she could not think of one person in the group who was not a productive employee.

Next Elizabeth looked to her management staff. While her managers were highly paid, she thought every of them were worth it. Finally, Elizabeth’s thoughts turned to one employee: George. George was unique in the department because he was the oldest employee yet he was not a manager. He earned a large salary due to his years with the company. Elizabeth had noticed over the past couple of years that George was not very innovative in his marketing presentations. When George was assigned a task, he needed a great deal of supervision to perform it correctly. Clearly, George was the employee that Elizabeth should lay off.

However, in recent conversations with George, Elizabeth had discovered that he was four months away from retirement. George’s wife was ill, and Elizabeth knew that George would be counting on his retirement benefits and the health insurance the company offered to retired employees. If George had to leave the company before his retirement, he would not be eligible for any of these benefits. It would be very difficult for George to find another job.

Given that knowledge and George’s performance, what action should Elizabeth take? 

What are the major elements of this dilemma that must be addressed and how would you respond to the allegations made by the anonymous caller?