Preparing for Employee Terminations
Introduction
This case was happened on the 7th of March 2000. Gordon Gillingham was president and CEO of Northeastern Mutual Life which was the major subsidiary of the Calgary Insurance Group, and this company operated life insurance, reinsurance, general insurance and investment, and other activities in North American and internationally. Since Northeastern Mutual Life’s return on common equity had declined steadily during past four years, so he had to decide how to reduce costs, and balance shareholder and employee interests. Therefore Gordon’s decision would lead to some problems, such as whether or not cut employees from his company (Ken Mark, 2002, p.4-5).
Ethical issues
No matter Gordon Gillingham did or not reduce cost, it still led to different ethic issues.
1. Employee terminations. If he decided to cut a part of administrative employees without themselves’ reason, his behaviors would cause employees feeling unequal treatment, and the company might get several complaints from his employees through the Pension Commission of Alberta.
2. Pension Commission might order a partial windup of the pension fund. Therefore, the company might face dealing with huge pension fund for fired employee.
3. Whether pension surplus belonged to the employer or employees. Assuming pension surplus all belonged to employer; employer had stealing behaviors if employee wanted this pension surplus.
4. Whether or not fired younger or older employees. If fired older employees, older employed might not very easy to find another job. However, fired younger employees, they might find other job easily, but they could be a new power for the company.
Stakeholder
Directly:
Shareholder: they were lost benefit no matter Gordon did any decision for the company. For example, if he decided to do not reduce employees, he would face shareholders’ pressure since the company’s return on common equity had declined steadily from 11.5 per cent to seven per cent (Ken Mark,
This case was happened on the 7th of March 2000. Gordon Gillingham was president and CEO of Northeastern Mutual Life which was the major subsidiary of the Calgary Insurance Group, and this company operated life insurance, reinsurance, general insurance and investment, and other activities in North American and internationally. Since Northeastern Mutual Life’s return on common equity had declined steadily during past four years, so he had to decide how to reduce costs, and balance shareholder and employee interests. Therefore Gordon’s decision would lead to some problems, such as whether or not cut employees from his company (Ken Mark, 2002, p.4-5).
Ethical issues
No matter Gordon Gillingham did or not reduce cost, it still led to different ethic issues.
1. Employee terminations. If he decided to cut a part of administrative employees without themselves’ reason, his behaviors would cause employees feeling unequal treatment, and the company might get several complaints from his employees through the Pension Commission of Alberta.
2. Pension Commission might order a partial windup of the pension fund. Therefore, the company might face dealing with huge pension fund for fired employee.
3. Whether pension surplus belonged to the employer or employees. Assuming pension surplus all belonged to employer; employer had stealing behaviors if employee wanted this pension surplus.
4. Whether or not fired younger or older employees. If fired older employees, older employed might not very easy to find another job. However, fired younger employees, they might find other job easily, but they could be a new power for the company.
Stakeholder
Directly:
Shareholder: they were lost benefit no matter Gordon did any decision for the company. For example, if he decided to do not reduce employees, he would face shareholders’ pressure since the company’s return on common equity had declined steadily from 11.5 per cent to seven per cent (Ken Mark,