(l-thics) “Employees expect that all parties will honor their explicit and im¬ plicit obligations. Distrust occurs when these obligations are not met or when the parties have different expectations regarding the obligations. When down¬ sizing is employed as an organizational strategy, itfocuses on economic goals over the promotion of commitment, and, as a result, the employees view the strategy with distrust.

“John A. Challenger notes, ‘It may be unrealistic to expect intense loyalty on the part of the worker when in many instances the employer cannot promise loyalty in return. The current spate of mergers in the banking, me¬ dia, utilities, and other industries, major re-engineering efforts, and down¬ sizings all have weakened the ties that spur employee commitment and productivity.' Frederick Reichheld states, ‘The great betrayal ofAmerican workers is the failure of companies to let them know how much value they are creating, versus bow much they are costing.

Source: Adapted from Larry Gross, “Downsizing: Are Employers Reneging on Their Social Promise?”

CPCU Journal (Summer 2001), p. 112ff.

a. In your opinion, does the achievement of high-quality operations man¬ date that a firm treat its employees ethically? Discuss.

b. Discuss how employee perceptions of their employers mesh with the open-book management requirement to have honest exchanges of infor¬ mation between employees and managers.

 LO.1