Welcome to the Vital Integrities Blog

Do Your Values Change When Your Stock Goes Up?

Rumors coming out of DaimlerChrysler's two-day board meeting have the carmaker eliminating more than 8,000 jobs from its Mercedes-Benz division. What would seem to be bad news has investors positively giddy. In fact, DaimlerChrysler AG shares rose nearly 4 percent just on the expectations of the announcement.

"The job cuts are the main reason the shares are up and we're hearing they could be more than expected," one analyst said. I can almost picture him licking his lips as he speaks. Analysts had expected DaimlerChrysler to eliminate a mere 5,000 jobs.

News of job reductions is not unusual, and DaimlerChrysler's leadership should not endure criticism for efforts to restore profitability to a beleaguered division. But what I find troubling is the typical stock market reaction. It seems whenever companies announce layoffs, their stock prices rise. The oh-boy-lower-costs-mean-more-money-for-me investor response is unsettling, especially in an era when more and more companies are basing business decisions on their impact on the next quarterly profit announcement. A skeptic might wonder if some layoffs are management's short-term solution to a declining stock price.

Guess what. Employees can be skeptical, even those spared from job cuts. And many will if their bosses are living by the values they profess when they say things like, "We bear responsibility for the people involved in or affected by the business activities of our company," like DaimlerChrysler proclaims in its Vision of Sustainability, and then eliminate thousands of those people's jobs.

In these situations, it's critical that leaders talk frankly with the employees who are staying behind. Explain the true purpose of the layoffs--after all, without profit, there won't be any jobs. But most importantly, explain that the action does not reflect a change in the company's core values. We still care about people, and--as DaimlerChrysler's Vision of Sustainability also declares--"We bear responsibility for the economic performance and the long-term business success of the company."

Hey, no one said living by the values you profess would be easy.
Bookmark this post on del.icio.us

Vital Integrities Blog - Blogged