Is a manager who pursues flexible alternatives to layoffs exercising his or her fiduciary responsibility to act in the best interest shareholders? This is an important question because it gets at the core of what drives the decision-making that leads to job cuts as the primary way to control labor costs in the recession.
Shareholder profit is indeed a manager’s fiduciary responsibility in a publicly-traded company. As a commenter noted on CV Harquail’s Authentic Organizations blog,
“When managers go beyond the business case for alternatives to layoffs, they sacrifice shareholder profits for the greater good. For many this proposal is a non-starter because it is inconsistent with managers’ fiduciary duties.”
Do flexible alternatives to layoffs in the form of reduced schedules and salaries, job sharing, furloughs/sabbaticals, and contract based employees, really sacrifice shareholder profits and therefore, challenge a manager’s fiduciary duty? You tell me…Let’s expand the cost/benefit analysis and look at it from three different perspectives—the individual company, the U.S. domestic economy, and the global economy. (Click here for more)