Is it Fair to Let Them Go? Using Performance Appraisal Data to Decide on Staff Cuts

Rodey Wing, a partner at global management consulting firm Kearney, had to decide what to recommend to a struggling retailer client with over 200,000 employees. With the client’s optometry division suffering from an excess of employees partly due to a pandemic downturn, Wing had initially planned to cut 1,500 employees from the division---laying off those with the lowest performance review ratings. However, a disproportionate impact assessment of the plan showed that employees from protected classes would make up a much larger share of terminated employees than expected. Wing had to determine how this information should impact his recommendations to the important client.

This case can be used in undergraduate- or graduate-level courses in organizational behaviour, human resource management, or leadership. This case is also suitable for use in business ethics courses where the focus is on action planning to resolve ethical issues. This case will help students at both the undergraduate and graduate level improve their understanding of several core concepts related to employee performance appraisal, the impacts of implicit bias on performance management, and how to build more effective performance management practices. <br><br/><ul><li>Termination decisions often come about from external pressure, financial decline, or changes in organizational needs that require urgency to ensure the organization can remain successful in the future. Students will be able to explore the need for urgent change and decision making, while also ensuring employees feel there was a high degree of distributive and procedural justice in the process. This perception is critical for organizations, as without it, it can lead to low satisfaction, employee turnover, and negatively affect performance. </li><li>Students will develop a broader view of the factors and perspectives that need to be taken into consideration when making termination decisions. </li><li>Performance appraisals are often the primary tool when making employment decisions, but appraisal systems themselves can be flawed. This can lead to disproportionate impacts on different employee groups, in this case minority groups, within the organization. Students will be able to explore best practices for improving such systems.</li></ul>

• diversity
• lay offs
• impact assessment
• terminations