1. Balancing Loyalty and Expertise in a Tough Downsizing Decision: A Case Study

Ted Simmons stared pensively at two personnel les. Simmons was the vice president of finance for Savannah Mills, a long-time business leader in the textile industry. Savannah Mills had endured another difficult year, as sales and profits were again lower than projected. Simmons had just returned from a staff meeting where he was told the company would be downsizing its staff as a way to reduce expenses. Simmons had to eliminate one of his two financial manager positions, and other job losses were to follow down the line in his department. In fact, all the major departments at Savannah Mills would face job losses, some more than others.

Simmons had the pleasure of working with two exemplary managers and eliminating one of these jobs from the company would be extremely difficult and unpleasant. Warren Davis had been with the company for almost 25 years. He had devoted his entire career to Savannah Mills; he started working there after high school. His dedication and commitment to the company were almost legendary. He had earned a college degree on a part-time basis while holding a job at Savannah Mills, getting a bachelor's degree in general business. Whatever the company asked Davis to do, he did with vigor and good cheer. He willingly accepted assignments where the company needed him and always expressed sincere gratitude for the chance to be with Savannah Mills. His father had been an employee of the company for over 40 years when he retired, and the Davis children grew up playing on company-sponsored recreational teams. Warren Davis was also very active in the community, representing Savannah Mills on various civic projects. Davis was once referred to as a "walking billboard" for the company, so deep was his loyalty to the company that meant so much to him and his family.

The other manager was Barry Steele. Steele had a very different history from Davis. Steele was 29 and had been with Savannah Mills for ve years. He had earned an MBA degree from a highly prestigious university in New England. Upon graduation, Steele had many job offers but chose Savannah Mills because of its expressed intent to more strongly professionalize the nancial operations at the company and to give Steele the opportunity to put his talents to work. Steele delivered on all the expectations of him and in fact exceeded these expectations. He revolutionized the company's system of managing nancial assets through the use of automated control principles he had learned in graduate school. It was through Steele's shrewd assessments that Savannah Mills avoided even bigger nancial losses, and he positioned the company to return to profitability. Steele was known as "the wonder kid" because of his accomplishments, but he never acted arrogant or pompous. He was not active in company or civic affairs but quietly went about his business. If there was ever a young employee who seemed destined for a highly successful future with Savannah Mills, it was Steele.

Simmons faced a dreadful choice. He didn't have to re one of his managers because poor job performance was not the issue. Rather, he had to choose to eliminate the position of a person whose contributions to the company were very positive. Simmons argued to the company president on the merits of keeping both managers. His arguments were to no avail because the issue was to reduce expenses, and all departments had to suffer the loss of good employees. Simmons felt this was one of the toughest calls he ever had to make, and no matter which way it went, the decision would speak loudly about what type of employee Savannah Mills valued the most.

1. Questions

Integrating the concepts from Chapter 10, respond to the following questions.

1. Psychological Contract Breach:Identify and analyze the specific aspects of the psychological contract at issue in this case for both Davis and Steele. Consider aspects like implied promises, fairness, and exchange relationships. Explain how the downsizing decision potentially breaches these contracts.
2. Organizational Messaging:Analyze the broader message each potential choice (eliminating Davis or Steele) might send to the remaining employees at Savannah Mills. Consider both short-term and long-term impacts on employee morale, loyalty, and perceived organizational values.
3. Organizational Citizenship Behavior:Evaluate the role of organizational citizenship behavior (OCB) in this situation. How do Davis's and Steele's contributions beyond their core job duties (e.g., community involvement, company loyalty) influence your perspective on a just decision?
4. Ethical Dilemma:If you were in Simmons' position, whose position would you eliminate and why? Clearly justify your decision, considering the aforementioned concepts, ethical considerations, and potential organizational consequences of each choice.
5. Beyond the Case:This case presents a simplified scenario. In real-world downsizing situations, additional factors like seniority, skill set diversity, and potential for reskilling might come into play. Discuss how these additional factors could influence the decision-making process and contribute to a more nuanced approach.