Using the Deontological Approach:
A part of the headline is the implication that there is something morally wrong with dismissing workers.  However, the maximization of shareholder wealth is a primary goal of financial management.  The question that is addressed is if it is appropriate to lay off workers for a promise of increases in shareholder wealth. Ethical thought should be given when layoffs are contemplated. The ethical issues surrounding layoffs are many because there is a wide range of circumstances where layoffs are involved.  Sometimes laying off workers is the moral thing to do and sometimes it is unethical. Companies use layoffs to reduce their workforce.  In this case, an employee leaves by choice and is not replaced by a new worker.

Using the deontological approach of rights and duties to solve such a problem presented, an examination has to be done to determine if any rights have been violated or any duties neglected.  If so, a recalculation needs to be done to determine the next alternative that produces the greatest amount of good for the largest number of people.  This must be done until a solution is found that does not violate any rights or neglect any duties.

We must consider the following:
·    Legal rights Vs Moral rights to layoffs
·    Do employees have a right to a job?
·    How about if the employees are performing satisfactorily?
·    Do managers have a right to layoff?
·    Do managers have a duty to layoff?
What alternatives are there?
·    Can the employees be reduced to part-time, or given leave of absence
·    Consider Early Retirement
·    Redeployment of employees
·    Employee assistance as last resort
·    Avoid Over-hiring altogether

A person using a deontological theory would consider the basic duties and rights of individuals or groups and act in accordance with those guidelines. You would make a decision based on what you consider your moral obligations or duties. Your action will be guided by a set of moral principles or rules. The work of the philosopher Immanuel Kant who lived in the 18th century is used in reference to deontology because he believed that every person has an inherent dignity and is entitled to respect. In one of his categorical imperatives, Kant says that we must not treat others exclusively as a means to our ends (Boathright, 2003).

For example, refer to the layoff Case in which you must decide whether to tell the employee the truth or to lie. If you believe that truth-telling is a sacred duty that you hold dear, then you would not be able to lie to the employee and tell him/her that his/her job is secure yet its not just to make feel him/her better. If you tell him/her a lie, that would be using the employee as a means to your desired outcome, however honorable it might be. In this case you are trying to achieve a better outcome. In this theory you do not consider the ends or the outcomes, but rather the means that you achieve them. In this case you have to tell him/her the truth to avoid having to go against your duty of truth-telling.

Strengths of deontological theory include: Ross’s theory (Boathright, 2003) on moral rules makes sense in application where consequences seem to be irrelevant. The theory also accounts for the role of motives in evaluating actions. Kant’s theory (Boathright, 2003) of respect for persons and universalizability are avenues of ethical reasoning the serve valuable correctness to utilitarian approach. Kantians also provides a strong foundation for rights, which is another of morality.

Weaknesses of deontological theory include: Ross’s theory fails to provide plausible account of how to we can know moral obligations and resolve problems of moral conflict. The rules are assumed to be universal yet they are not and no order of priority is given where they conflict or used to solve a problem (also see Boathright, bottom of pg 52). Kant’s categorical imperative is too limited to serve as the basis for a complete ethical theory (Boathright, 2003).

This kind of layoff is tough to carry out because few would argue that workers have a right to a job and that managers have a duty not to lay them off.  One question is more difficult, because the question is whether an employee has a right to keep his job as long as he is performing his tasks satisfactorily.  Rights and duties analysis is focused on the individual, and in this case should be examined from the management side.  "What a manager may or may not do is determined by the rights of the employed individual".  So the rights and duties analysis shows that workers have no real right to a job. Managers are actually employed by owners, and that managers actually have a sole duty to stockholders. This leads to the conclusion that managers indeed sometimes have a duty to conduct layoffs, and in fact it would be unethical not to lay off workers in some instances.  

Since this an attempt to save a company other than let it fail, it is necessary to answer whether or not managers have a duty to take steps that are more likely than not to fail.  Managers would seem to have the right to conduct a layoff because “no overriding right” exists for employees to have a job.  However, it would have been difficult to prove that managers have a duty to do a layoff in the case of an already well performing company.  Using the deontological theory, we would inform the employee/friend that the layoff is forthcoming, to allow that person the time to look for other employment. While not disclosing all the details, since I don't think we have them anyway according to the case. And we would honor our position as managers in staying honest in our position and to our responsibility to the company.  And if there were consequences in disclosing the information to the employee that cannot be our concern by letting them assume the risk. Because according to the deontological theory we would want to know if a layoff was coming if our roles were reversed. And the "do unto others" attitude (Boatright, 2003) and respect for our employee/friend is what drives us to inform them of the possible layoff.

Reference:
Boatright, John R. (2003). Ethics and The Conduct of Business. Upper Saddle River:
                  Prentice Hall