Moral Compass Paper: Business Level Strategy and Ethical Analysis

This paper undertakes a comprehensive analysis of an automobile company's ethical decision to reduce its workforce without resorting to layoffs, employing Paine's Moral Compass as its analytical framework. The introduction establishes the significance of ethical decision-making in business operations and introduces the four lenses of Paine's Moral Compass: Purpose, Principle, People, and Power. The business decision under scrutiny involves the company's strategy to eliminate 7,000 positions through attrition over a decade, aiming to save $6.7 billion. The analysis begins with the 'Purpose' lens, evaluating the goals of cost reduction, recession mitigation, and competitive advantage, and explores the ethical implications of the decision's impact on stakeholders. The 'Principle' lens examines the consistency of the decision with employment laws and ethical standards, considering alternatives like layoffs. The 'People' lens assesses the impact of the decision on employees, job seekers, and customers, weighing the benefits of job security against the limitations on new hires. The 'Power' lens acknowledges the management's authority to make such decisions. The conclusion provides a critique based on Christian and biblical principles, reflecting on the moral implications of the business decision.

Running Head: Moral Compass Paper: Business Level Strategy / Generic Strategies
MORAL COMPASS PAPER: BUSINESS LEVEL STRATEGY /
GENERIC STRATEGIES

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Moral Compass Paper: Business Level Strategy / Generic Strategies
Table of Contents
1. Introduction............................................................................................................................3
2. Business decision...................................................................................................................3
3. Paine’s Moral compass...........................................................................................................3
3.1. Purpose (will the ethical action serve a worthwhile purpose?).......................................3
3.2. Principle (Can the action considered as consistent with related principles?)..................5
3.3. People (Did the ethical action respect the legitimate claims of people who are likely to
be impacted?)..........................................................................................................................7
3.4. Power (Do the concerned decision maker has the power to make such decisions?).......8
4. Conclusion..............................................................................................................................9
Reference list............................................................................................................................11

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Moral Compass Paper: Business Level Strategy / Generic Strategies
1. Introduction
Moral decision making is a difficult business operation and Paine’s moral compass
can be considered helpful to evaluate the effectiveness of moral business decisions. This
paper is evaluating an ethical decision of an organization with the help of four lenses of the
moral compass of Paine. Purpose of making the chosen decision and principles associated
with the decision are being discussed at first. After that this paper is discussing legitimate
claims of people that can be affected by the decision and the power of the management to
make the decision. At the end of this paper, Christian and biblical principles of decision
making are being discussed.
2. Business decision
Global recession has impacted every sector and industry including the automobile
firm where I work. It can be seen that this firm has started to reduce their workforce without
layoffs. They have taken an ethical decision of avoiding layoffs for the next 10 years.
However, they will not recruit in the positions of retiring workers. The organization has a
target of eliminating 7000 positions through this way that can help them to save up to $6.7
billion. According to the management of the company, layoff could have declined overall job
performance by 20%. In addition, bulk layoff could have a negative impact on current
employees and can decrease their morale. Layoff can have a negative impact on stock
performance of a company (Schwartz, 2016). This ethical decision has helped to preserve the
overall performance and productivity of the company and on the other hand, the objective of
reducing workforce for cost cutting can also be achieved.
3. Paine’s Moral compass
3.1. Purpose (will the ethical action serve a worthwhile purpose?)
In answering the question of purpose in respect to ethical action, different dimensions
need to be considered. As said by Paine (2002), “pragmatic analysis examines the quality of

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Moral Compass Paper: Business Level Strategy / Generic Strategies
our goals and the suitability of the means we choose for attaining them.” The company is
trying to accomplish reduction in operational costs, which is the first short term goal. The
second short term goal of this automobile company is to reduce the impact of recession by
decreasing the workforce. Moreover, this action can also help to achieve organizational long
term goals that include gaining competitive advantage and expanding the business operation.
This ethical action of not recruiting in the position of retired employees can help to achieve
both the short and long term goals but at a slower rate.
Achieving goals of different span of time through the chosen decision is worthwhile.
Achieving the first short term goal can give a scope to the concerned company to improve the
business style and incorporate more technologies that helps to gain desired business
outcomes. This company can increase the stability through achieving its second short term
goal of reducing the impact of recession. Johnson (2017) argued that competitive advantage
can be gained by decreasing the negative impact of recession, which can help the firm to
serve the community and people for a longer time. Increasing business operations can help to
involve more people like suppliers, distributors and workers in future. Hence, achievement of
these goals can help to contribute in fulfilling the needs of stakeholders in future.
The ethical action of not terminating current employees to reduce the workforce will
contribute to obtain the above mentioned goals. Additionally, it can help to maintain the
motivation level of current employees while business objective of reducing operational cost
can be achieved. However, this action can also have a negative impact in the achievement of
long term goal of achieving competitive advantage. Less strength of workforce reduces the
productivity of an organization. Due to this reason, this organization needs to provide
effective training to remaining employees to help them to improve their working skills.
Layoffs of employees are a possible alternative, which can be considered in place of
this ethical decision. However, this alternative cannot be considered as ethical as it will

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Moral Compass Paper: Business Level Strategy / Generic Strategies
impact negatively on the financial condition and living standard of terminated employees. As
opined by Hartman, Metselaar, Widdershoven & Molewijk (2019), sudden layoffs of
employees can cause reduction of profitability of a company. Layoffs or termination of
employees generally impacts performance of employees. This situation prevents organization
to achieve the long term goals like gaining competitive advantage and expanding business
operations. Termination of employees generally impacts the reputation of a company, which
can create barriers to increase the customer satisfaction level. On the other hand, this ethical
action is a slow process and confidentiality can be maintained among management. Hence,
less or no negative impact is there in this ethical action as compared to the alternative.
3.2. Principle (Can the action considered as consistent with related principles?)
This lens of Paine’s Moral Compass is advising a person to evaluate a particular
action from the standpoint of applicable principles. As mentioned by Winston (2018), in the
US, the Employment and Labor Law 2019 has been developed to state legislative guidance
for both employees and employers. As per this legal system, an employer or an employee can
terminate the concerned employment at any time if they wish to do so for reducing the
workforce. This action cannot violet the employment law. According to the industry code and
present standard, mass layoff can be done at any time for the benefit of business and it is not
required to provide any notice for this action. No ethical duty has been mentioned for the
cases of at-will employment in the United States. However, it is the moral duty of a person to
remain ethical while making major decisions, which may have great impact on others.
Under these standards, both employees and employers need to remain ethical in terms
of terminating the employment. According to Bazerman & Sezer (2016), it is the duty of an
employer to consider the loss of employees if they are suddenly laid off. On the other hand,
their duty is to think about the other harmful effect of layoff on their business. For example,
sudden layoff can create a fear and stress on current employees. It reflects on their

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Moral Compass Paper: Business Level Strategy / Generic Strategies
performance and can impact on overall productivity. They feel that this kind of situation can
happen to them at any time. As a result, an unstable condition appears in the whole
organization and work environment gets hampered. Ultimately, the concerned company fails
to achieve different essential projects on time.
Best practice under these standards is to remain ethical in terms of reducing the
workforce. Ndalamba, Caldwell & Anderson (2018) have mentioned that it's legal to
terminate employment at any time. However, it cannot be considered ethical. Employers need
to search for better alternatives that can help them to reduce the workforce without harming
the present employees. This practice can help them to reduce turnover of skilled workers and
gain success in business operations. On the other hand, McDaniel (2017) has argued that
being ethical allows employers to value the needs of both employees and customers. A good
relationship between employers and employees helps to inject positive energy in the work
environment.
The proposed action honors the applicable standards as the employee is not
terminating employment intentionally for being ethical to employees. As per the mentioned
business decision, the vacant places are not being filled by new employees. As mentioned by
Ndalamba, Caldwell & Anderson (2018), this decision is providing job security to employees
and motivating them. This kind of action of employers provides homely environment to
employees and they provide their best effort to achieve goals given to them by the
management. As a result, the level of customer satisfaction increases. This proposed action is
consistent with employer’s own espoused ideals and standards as they are complying with the
existing standards along with remaining ethical.
3.3. People (Did the ethical action respect the legitimate claims of people who are likely
to be impacted?)

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Moral Compass Paper: Business Level Strategy / Generic Strategies
The current employees, management and job seekers will get affected directly by this
ethical decision. In addition to this, customers of this automobile company will get impacted
indirectly.
All of the stakeholders will be impacted through this ethical decision either in a
negative or positive way. The employees of this firm will be benefited because there will be
no layoffs for the next 10 years as per the decision of the management. This decision means
that they are getting job security for the next 10 years. The management can achieve both
short and long term goals through this decision. However, current job seekers will be
negatively impacted because they will not get opportunities to join this company. Customers
are important stakeholder group of this business and they will be affected indirectly due to
the sudden changes in the behavior of employees because of the decision of layoff.
Employment and labor law 2019 states that it is the right of employees to achieve job
security and other benefits (Johnson, 2014). However, it is legal to terminate the contract of
employment at any time by employees or employers. Customers expect superior service and
good communication from the organization. It cannot be possible after a sudden mass layoff.
(Melé & Fontrodona, 2017). Management of the firm has the right to take decisions for
achieving organizational goals through improving their recruitment strategies.
The ethical action respects the legitimate goals of all the affected parties. The
employees are getting job security, while the management of this company is achieving their
goals. On the other hand, customers can also obtain good quality products and services due to
increased performance of motivated employees. However, the expectation of job seekers
cannot be respected by this ethical action taken by the automobile company. The company
has not taken any step to compensate for this infringement.
Different unnecessary harms can be caused through the decision of reducing
workforce. This includes a negative impact on the company's reputation and stock market.

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Moral Compass Paper: Business Level Strategy / Generic Strategies
Decrease of motivation and performance of current employees can happen due to layoffs,
which can lead to increasing rate of employee turnover (Winston, 2018). However, the
company has announced no layoffs in the next 10 years and maintained confidentiality of the
decision of no recruitment. This has helped to mitigate unnecessary harm.
Alternatively, the recruitment process could be continued on those positions that
require more human involvement. This can help the firm to respect the interests of job
seekers and gain sustainability. This can help to maintain more balance and requirement of all
the parties can be delivered properly.
Full advantage has been taken of the opportunities for mutual benefit through this
ethical decision. Different direct stakeholders like owner, employees are getting advantage
through this decision because owners can achieve cost reduction and save the firm from
negative impacts of recession. On the other hand, employees are also achieving job
satisfaction and motivation.
3.4. Power (Do the concerned decision maker has the power to make such decisions?)
The chosen business decision has been made by an employer and this person has the
legitimate power to make this kind of decision. It can be said that this person is legally
authorized to make any decisions regarding recruitment or termination of employment.
According to Bazerman & Sezer (2016), in the US, stakeholders like employees and
employers cannot expect any benefit from the opposite party as per the Employment and
Labour Act 2019. This law has mentioned that both employers and employees of at-will can
terminate the employment at any time as per their choice. However, it is a moral duty of both
parties to think about each other regarding any decision like termination or recruitment. Here,
the employer has remained ethical by providing job security to employees while achieving
their goals of operational cost reduction.

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Moral Compass Paper: Business Level Strategy / Generic Strategies
The concerned employer is within his own rights to perform the proposed action.
Decision of reducing the workforce by not hiring new employees has not harmed anyone and
it has not affected the business negatively As mentioned by Paine (2002), “legitimate
authority and unless the actor actually has the ability—the skills, resources, clout, energy—to
carry out the proposed plan”. Sudden layoff may affect the economic status of employees.
On the other hand, it can affect the remaining employees and job satisfaction can be
decreased. As the proposed action is not affecting present employees, it is not required to get
their consent on this matter. It is totally up to the employer whether the business requires
more employees or not.
It is important to measure the available resources including skills and knowledge
before making any decision. As stated by Winston (2018), without proper resources and skills
effective decision making cannot be done. Due to this reason, employers are bound to remain
ethical in case of reducing the workforce. In case of the chosen business decision, enough
young employees were there to help the company during problem solving and decision
making. This company has a good internal business communication that has helped
employees to become moral support to each other. Young and middle aged employees are
getting advice from the senior employees that will help them in the future to maintain the
performance growth of the company. Johnson (2017) said that different essential tangible
resources like technological support, human resource and capital is essential to take any
decision for an organization. In this case, the company has an improved technological
infrastructure and workforce that motivated the management to take this ethical decision. On
the other hand, this company has the power and financial support to hire more employees in
the future if required.
4. Conclusion

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Moral Compass Paper: Business Level Strategy / Generic Strategies
From the above discussion, it can be concluded that the ethical decision about not any
further recruitment for cost savings and not terminating any employees is beneficial for all
the key stakeholders of the firm. According to the biblical principle of equality, employees
must be seen as human beings and even the under performers must be respected. This
decision can be related with this biblical principle because the employers are standing beside
the employees and the procedure of playoffs has been avoided. Moreover, the biblical
principle of stranger states that “God’s intention always was that all people would have the
opportunity to be in the same special relationship with Him”. It is necessary for the
employees to feel estranged with the leadership. Through this decision of not laying off
employees for 10 years, employees can be engaged properly with company objectives.
Moral character of God reflects on the Christian principle of ethics. It means that this
principle advises a person to develop good, eternal and unchanging characters. According to
the Christian principle of ethics, a person can get the blessings of God in their daily lives, if
they perform some good action for the sake of others’ benefit. From the entire discussion of
this paper, it has been understood that employers of US are not bound legally to think about
the benefit of their employees. However, they are concerned about employees and the
mentioned decision has been made for protecting the job of employees. As a result, the
employee will get loyal and dedicated employees to ensure business growth.

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Reference list
Bazerman, M. H., & Sezer, O. (2016). Bounded awareness: Implications for ethical decision
making. Organizational Behavior and Human Decision Processes, 136, 95-105.
Retrieved from:
https://www.researchgate.net/profile/Ovul_Sezer/publication/308134559_Bounded_a
wareness_Implications_for_ethical_decision_making/links/
5a6250e5a6fdccb61c5276cd/Bounded-awareness-Implications-for-ethical-decision-
making.pdf
Johnson, C.E. (2014). Meeting the ethical challenges of leadership (5th ed.). Thousand Oaks,
CA: Sage Publications
McDaniel, J. (2017). “Strengthening the Moral Compass”: The Effects of MDMA
(“Ecstasy”) Therapy on Moral and Spiritual Development. Pastoral Psychology,
66(6), 721-741. Retrieved from: https://link.springer.com/article/10.1007/s11089-017-
0789-6
Melé, D., & Fontrodona, J. (2017). Christian ethics and spirituality in leading business
organizations: Editorial introduction. Journal of business ethics, 145(4), 671-679.
Retrieved from: https://link.springer.com/article/10.1007/s10551-016-3323-3
Ndalamba, K. K., Caldwell, C., & Anderson, V. (2018). Leadership vision as a moral duty.
Journal of Management Development. Retrieved from:
https://www.researchgate.net/profile/Cam_Caldwell/post/How_would_you_approach
_this_possible_dissertation_topic_how_to_instill_leadership_not_management_skills
_in_students/attachment/5ae024b34cde260d15dac5c1/AS
%3A619194576015360%401524638899153/download/
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Paine, L.S. (2002). Value shift: Why companies must merge social and financial imperatives
to achieve superior performance. New York, NY: McGraw Hill
Schwartz, M. S. (2016). Ethical decision-making theory: An integrated approach. Journal of
Business Ethics, 139(4), 755-776. Retrieved from:
https://files.transtutors.com/cdn/uploadassignments/2721686_1_ethical-decision-
making-theory.pdf
Winston, B. E. (2018). Biblical principles of hiring and developing employees. Germany:
Springer International Publishing.