Operations Management and Ethics

Operations management can best be described as the design, operation and improvement of the systems that produce and deliver a firm's goods and services (Chase, Jacobs & Aquilano, 2005). Within the realm of operations management, the decision-making process can be defined into three broad areas. Strategic or long-term decisions, intermediate or tactical decisions, and operation planning and control, or short term decisions (Chase, Jacobs & Aquilano, 2005). It is important to note that none of these decisions are mutually exclusive. Many times one or more of the three decisions will occur simultaneously within operations management.

Operations management frequently involves the addition of new resources, the rearrangement of existing resources within a system, and the deletion of resources from a system to execute the strategic, intermediate or short-term decisions made by operations managers.

Consider a cable company that wants to implement the strategic goal of providing cable service using a digital cable system, while simultaneously phasing out the existing analog cable system. This would represent a strategic decision. The company would then purchase new equipment to deliver a digital cable signal to its customers. This represents the tactical decision. Retraining the existing staff to support and maintain the day-to-day functions of the new digital cable system becomes the controls and planning i.e. short-term decision.

It is important to realize that the goal of operations management is to affect the entire system in a positive manner (Chase, Jacobs & Aquilano, 2005). To this end system level thinking is critical for successful operations management.

For the last 10 years the Vialcom Corporation has been outsourcing all of its maintenance work. This has been accomplished through layoffs and/or transfers of maintenance personnel over to subcontractors. Subcontractors have assumed the responsibilities for all maintenance work within the company.
The only maintenance personnel that are still on the Vialcom Corporation's payroll consist of five men who have each been with company for about 22 years. All five of the men were within three years of retirement.
Maintenance personnel are either laid off or transferred over to the sub contractors' payrolls in the month of August. This last August it was expected that the last five maintenance personnel on Vialcom Corporation's payroll would either be transferred or laid off.

However operations managers in the Vialcom Corporation's maintenance department decided to keep the five workers on the company's payroll since they have worked with the company for so long and are so close to reaching retirement. From a purely business standpoint this was not the expected decision since all of the maintenance work has been contracted out as part of a strategic company directive to outsource all noncore business activities.

The question becomes, ethically did the managers who decided to keep the 5 men on the company payroll do the right thing. Did they dodge a business responsibility and move against a company directive for no substantial reason other than to allow a select few workers to retire on the company's pension plan. Is this an ethical act?

Conclusion

The managers in this case did perform ethically. By keeping the five-men on the company's payroll they retained a significant level of worker experience within the company. They also showed other employees that the company has a commitment that extends beyond the norm to its employees. The managers' actions will discourage talented employees from seeking employment elsewhere and help with the retention of core employees. By showing a level of commitment to a group of employees that was not expected, I think that the managers have made great strides in boosting the morale of the current workforce and in also retaining the remaining employees who perform core business operations.

References
Chase R., Jacobs F., & Aquilano N., (2005). Operations Management for Competitive
Advantage 11th edition. New York: McGraw-Hill.