MARK JAMES A.

ALBA

PM 214 – Leadership and Ethics

Caselet 1 – Fair Wage?

I – Brief Background:

The case is all about the ABC Corporation that already operating for 10 years, but due

to its financial difficulties the company borrowed money from the bank to be able to continue

its operation. But due to Covid-19 Pandemic the Philippines economy was weaken and many

companies was affected, the ABC Corporation is one of the companies that was affected by

this pandemic, because of that it was not able to pay its occurring debt from the bank. Now the

bank is demanding them to pay its debt or the interest within 1 year, if they can't pay their

existing debt the bank will take over the corporation, because of that the company was no

choice to reduce their expenses by mass lay-off of its employees. The employees of the

corporation had dialogue with them, instead of laying-off some of its employees, they

preferred to have a lower salary than the minimum wage, so that some of employees may be

retained in the corporation. The corporation insisted to the employee's dialogue that is a

criminal act to pay a salary lower than the minimum wage rates, but the employees insisted

their dialogue and the corporation gave in with their request, but the employees need to sign a

document stating that they actually received the right wage and it is to appear that the

corporation is paying the right amount to them.

II – Statement of the Problem:

1. How to improve the Performance of the ABC Corporation and be able to pay their debt

or interest from the bank within 1 year?

2. Is the decision of the ABC Corporation morally correct to accept the dialogue of it's

employees to pay them below minimum wage rate?

 3. Is the employees action or dialogue of the ABC Corporation morally correct and

justifiable?

III – Objectives:

To be able to find answer on how to improve the performance of the ABC Corporation

and be able to pay their debt or the interest from the bank within 1 year during this Covid-19

pandemic and if it is morally correct and justifiable for the decision of the ABC corporation to

accept the dialogue of its employees and also, if the action or dialogue of its employee is

morally correct and justifiable.

IV- Areas of Considerations:

The following are factors that need to be considered that can affect the resolution of

the problem or case study of the ABC Corporation, namely the 10 years operation of the ABC

Corporation, their debt or the interest needed to pay to the bank within 1 year, Covid-19

pandemic & the weakening of the Philippine economy, to cut down its expenses by having a

mass layoff of its employees, the employees dialogue that they requested, instead of mass

layoff of their employees they preferred to be paid below minimum wage rate, is the decision

of the corporation morally correct by accepting the dialogue of its employees and lastly, is the

action of its employees morally correct and justifiable.

V – Alternative Course of Actions:

ACA 1 – To formulate new and effective plans and strategies to be able to improve its

performance & be able to pay their existing debt or the interest from the bank within the year.

Advantages: It will improve the ABC corporation’s performance and be able to find

ways on how the corporation will be earning more income to be able to pay their

existing debt and the interest. Also, their company may be able to continue its

operation and may not need any more to cut down its expenses.
 Disadvantages: Additional fund needed to develop new and effective plans and

strategies for the betterment of the performance of the corporation during this Covid-

19 pandemic. Also, there is the risk that the newly created plans and strategies are not

effective during this Covid-19 pandemic.

ACA 2 – To stop the operation of the corporation and let the bank to take over the corporation.

Advantages: The management of the corporation will be free from the stress to decide

if its morally correct to accept the dialogue of its employees to be paid below minimum

wage rate instead of mass lay-off of its employees. The management of the company

will be paid and released from their debt in the bank.

Disadvantages: The management will lose its existing rights from the corporation and

its source of income. Also, the 10 years of operation of the ABC corporation will be

going to waste.

ACA 3 – The corporation will not accept the dialogue of its employees and will go for mass

layoff of its employees to be able to cut down its expenses.

Advantages: The management will not be morally and criminal liable to its employees

and to the authority of this country, because paying salary below minimum wage rate is

against the law and that the company might face a criminal offense.

Disadvantages: The management will lose portion of its manpower due to the mass

layoff of the corporation and there is a tendency that the company will incur more

losses and poor performance due to this layoff and cost cutting.

ACA 4 – The corporation will accept the dialogue of its employees and will pay them below

minimum wage rate.

Advantages: The manpower of the corporation will be not reduced and at the same

time they can lower their expenses. Also, the corporation will be benefited because the

employees we still work their usually functions at minimal cost.

Disadvantages: The management will be liable to immoral and criminal case against its

employees and the authority of this country, because it is against the law to pay below
 minimum wage rate. Also, the corporation may incur additional cost for the sanctions

and penalty for their crimes and for the attorney’s fee that they will hired for legal

services.

ACA 5 – Provide a working arrangement or scheme for the schedule of work for its employees,

like Work from Home Scheme or Skeletal workforce.

Advantages: The management will still have his existing employees and there is no

need any more to have a mass layoff, instead his employees will be still working in the

corporation but in alternatively or by schedule scheme as needed. Also, it may lower

the expenses of the company with this kind of working arrangement.

Disadvantages: The management will lose portion of its manpower due to this kind of

working arrangement scheme and if they will go to a work from home scheme, the

corporation may be obliged to give laptops and other aides for its employee to be able

to work from home comfortably.

ACA 6 – Proceed with the mass layoff but give the employees a good separation fee so that

they will have money to use while looking for a job or have an investment to start their own

business.

Advantages: It will lessen the grudge and hatred of the layoff employees from the

corporation and it may increase the good reputation & goodwill of the corporation

during this Covid-19 pandemic.

Disadvantages: The management will incur additional cost for the separation fee of its

lay off employees.

VI – Recommendations and Conclusion

Recommendations:

I recommend ACA3 and ACA6 to solve the problem regarding the ABC corporation

financial problems, as a corporation that was recognized its operation by the authority of this

country are required to follow the rules and regulations set up by the said authority. It is a
criminal case to pay an employee below the set minimum wage rate and it is against the law of

this country even though there is internal agreement between its management and

employees. Also, the employees can deny anytime the internal agreement between him and

its employer, also the authority will side with the employees, because it is the role of the owner

of a business to pay its employee at minimum or above the wage salary rate, not below. The

management should properly and justifiably choose those individual to be layoff based on their

performance and significance for the continued operation of the corporation. Also, the

management should give the rightful amount of separation fee to the layoff employees so that

they will have money to use while applying for a new job or to have a starting capital to start

their own business in the future as their new source of income.

Moreover, I also recommend the ACA1 and ACA5, instead of having a mass layoff the

management may developed new plans and strategies to continued operation of the

corporation at the same time lowering the expenses and have a higher income or sales. The

management can make a policy about cost cutting measure of their utility expenses and other

maintaining and operating expenses without sacrificing the quality of their services and

products. Furthermore, the management may adopt new working arrangement or skeletal

workforces’ scheme, so that the employees will be still working in the company at the right

salary but alternatively and as needed of the corporation.

Conclusion:

The list of alternative courses of action stated in the recommendations can help the

management of the ABC Corporation on how to resolve their problems about the operations

and financial status of the organization. It is very important for a company to follow the rules

and regulations set up by the authority of this country, they must obey it at all times and in any

situation or circumstances, because not following these rules and regulations may lead to a

criminal cases and closure of the corporation and will be blacklisted in the SEC to apply for a

new business. The layoff employees will understand the situation of the corporation, provided
that the company will properly explain why they are layoff from the corporation and through

properly and rightful process of selecting the employees that will stay in the corporation based

on their performance and significance in the corporation. Moreover, just pay properly the right

amount of separation fee for the layoff employees.

Lastly, the management of the ABC Corporation should develop and research for new

and effective ways and strategies that will improve its operation manual and properly manage

the financial capability of the organization, so that they can avoid too happened this kind of

situation in the future and the corporation will be more ready if this kind pandemic and any

natural calamity or crisis that will occurs in the succeeding years to come.