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Ethical issues often deal with what is right and what is wrong, what is good and what is

bad, and what rights and responsibilities people should have. The general goal of ethics is to
enable people to live good lives. Within the business context, it involves making decisions that
align with that sense of right and wrong, as well as with the law. Various examples of ethical
dilemmas exist in todays business environment. Here, we can take the example from one of
established organization Malaysia that is Malaysia Airline (MAS). Malaysian Airline System
Berhad provides air transportation and related services. The company operates through two
segments, Airline Operations and Cargo Services. It offers passenger, cargo, and mail transport
services. In addition, it provides catering and cabin handling services, trucking, clearance, and
warehousing services, as well as tour and travel related services. It operates a fleet of 88 aircraft
and carries passengers to 80 destinations worldwide. The company is headquartered in Subang,
Malaysia. Malaysian Airline System Berhad is a subsidiary of Khazanah Nasional Berhad. The
ethical issue that facing by MAS now is the rate of turnover and downsizing of their employees.
The 19,500 staff of Malaysia Airlines (MAS) now faces a new ordeal whereby a quarter of them
may lose their jobs at the unprofitable airline, hit by two jet disasters this year. After the eight
months disappearance of MH370, it is no wonder that the number of travelers opting for
Malaysia Airlines (MAS) has dropped. The national airline is currently in deep red for their
financial performance. As there is no other way but to downsize the number of their employees
to cut some cost. It can be said that the decision to simply downsizing is unethical manner
whereby it should be the last option they should made. Aside from that, Malaysia Airlines were
also facing the internal problems such as high turnover rate on employees whereby in search of
greener pastures Jabbarullah claim that over a hundred engineers and 36 junior engineers have
deserted MAS in the past two years with an estimate of 20 crew members taking their exit each
month. Downsizing can have significant negative outcomes especially on employees element.
According to Vries and Balazs (1996), downsizing gives impact through the reaction pattern. The
employees are classified as the victims that pass through several kind of emotions such as
despair, protest and as well as detachment. The researchers were also mentioned that the victim,
which is the employees, have two levels of reaction patterns. One of the patterns is on individual
level which they will experience job security, low trustworthy and short term decision making.

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The other patterns are on organizational level, which they will facing cultural change, value
system breakdown, negative effectiveness and loss of instructional memory.
The ethical problem that occurs in MAS might be because of the problem in its
management or personnel itself. From the evaluation on MAS, the previous management team
has set their objectives clearly and has the best strategies to obtain their objectives but at the
same time, a portion of their employees did not know exactly how to implement the strategies
effectively. That is why MAS has met many difficulties and losses in their business and need to
turnaround the business to recover the problems and require high turnover rate among their
employees. This can be explaining the characteristic of the ethical problem in terms of
leadership. For a business to be ethical, its leaders must demonstrate ethical practices in any
situation. The true test of this leadership is in the decision-making process when there is a choice
between what is ethically responsible and what will result in profit or gain. Leaders, who can
consciously choose the path that is ethically correct, as opposed to one that is purely financially
driven, have successfully created an ethical culture in the business. When the culture is solid at
the top of the organization, it trickles down to all areas and employees.
Recently MAS has announced that their will downsize their employees by reducing up to
6000 thousand of their employees. The ethical issue here is the employers did not concern much
on the welfare of the employees. They did not aware that this decision might jeopardize the
career and income of their employees if they jump into conclusion to downside the number of
workers. This can be categorizing on characteristics of ethical problem in terms of concern. An
ethical business has concern for anyone and anything impacted by the business. This includes
customers, employees, vendors and the public. Every decision made by the business is based on
the effect it may have on any one of these groups of people, or the environment surrounding it.
Meaning to say, leader is the one that who will be responsible towards what is going wrong
throughout organization rather than making the unethical decision that will affect subordinates.
In the case of MAS, they should be considered all aspect when it comes to downsize the number
of employees.

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A good leader will be a problem defender, not the one that being passive when problem arises.
This is unethical as normally happen when there is a problem especially the one that involved
financial problem; downsizing will be the first in the list.
MAS should first scanning and forecast the affect and impact from the decision. This can reflect
on the leadership style that particular organization it is. The decision will affect the good image
and reputation of MAS as well. So, MAS should be rational before making any decision so that it
will not affecting anything.
The other characteristic of ethical problem in MAS is on its values. An ethical business
has a core value statement that describes its mission. Any business can create a value statement,
but an ethical business lives by it. It communicates this mission to every employee within the
structure and ensures that it is followed. The ethical business will institute a code of conduct that
supports its mission. This code of conduct is the guideline for each employee to follow as he
carries out the company's mission. In MAS, it seems like they do not implement a clear state of
values to the members within the organization. That is why the turnover rate among MAS
employees is high as they have unclear vision towards organizations value that is implemented
in their organization. MAS should be transparent whereby they should keep their employees are
aware of the value that are stated. Without clear value, it is not possible that unethical problem
will arise within their organization. Values is something that people will follow and belief in
order to be successful in their job. As employees given a clear value, it will build trust in them
and from that they will feel secure and the same time, they will build loyalty towards their
organization. Values that is unclear will make employees has no guideline and have no clear
vision on what to expect from the organization. When employees feel that the career path in the
organization unclear, they will choose to leave the organization to find other workplace that is
Solid relationships are a basis of an ethical business. Loyal relationships are mutually
beneficial and both parties reap benefits. Employees who work for a loyal employer want to
maintain the relationship and will work harder toward that end.

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Vendors and customers will remain loyal to a business that is reliable and dependable in all
situations. An ethical business stays loyal to its partnerships even in challenging times. The result
is a stronger relationship when emerging from the challenge. This is the other ethical
characteristic that MAS did not emphasize more.
If an employee feels emotionally or socially detached at work and cannot seem to fit into the
organizations culture or blend with other colleagues, feelings of dissatisfaction may start to
occur. The employees may prefer to find another job than try to approach the issue directly.
Workplace relationships and interaction have an impact on employee satisfaction and retention.
Negative attitudes can lead to isolation and loneliness, which may prompt an employee's desire
to resign. MAS should have more strong relationship between top management and employees
so that the employer will know more about what is going on at the bottom level management,
aware of the contribution of the employees towards the organization as well as concerning about
employees welfare. From this they will know consequences that may occur when they decided to
In order to cope with ethical problem, there is some of the recommendation for a better
solution for MAS in order to deal with downsizing issue. One of the recommendations is to solve
the problem by reduce salary of the employees instead of downsizing them. Meaning to say, the
employees has the right to stay because they are already contribute to MAS and have struggling
out in order to be in that organization. Reduce the number of salary and bonuses are better than
downsize. It would not give negative impact to anyone. In the critical situation, all members in
organization need to be together and have a strong team work. From that, the solution to the
problem may have its way out because everyone in the organization will contribute ideas and
opinion that may be good. This will make employees feel more appreciated because they are
given the opportunities to be part of the problem solver, instead of quitting from the job.
Other recommendation is to give support employees who choose to leave. Separation
may be the best option for employees whom are not able to overcome their negative feelings
toward downsizing exercise.

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Preferably the management should work out a training plan that will lead to new employment
opportunities for those who wants to leave. That will be useful for employees to develop new
skills for other jobs within the organization or outside the organization. The best way to handle
employees morale is to give advance notice possible (Mochal,2003). This is important for
employees to prepare mentally as well as physically. Employees who are mentally prepared are
generally more calm and courteous when the notice is given. They will not express anger or
frustrated during those last days on the job.
With advance notice, employees' can update their resume, start looking at the job market, and
start to cut back on their personal expenses. Mochal (2003) claimed that the employees whom
views the exercise from the positive perspective would react positively. They would be able to
learn what they can and will be able move forward in their future undertakings. They may
become more prepared by doing a better job of keeping their skills up to date. They may decide
that they need to become certified in their skill sets. They may decide to move into consulting
positions. Once they understand the basic point, they may lead to more options and a better
chance for success in the long term and will not feel regret from being the victim of downsizing
On the other hand, when there is no other way but to stick with the decision in
downsizing, MAS need to educate employees to sustain focus on performance. This is for those
who did not selected to be downsize, which is the retain employees. How downsized employees
are treated directly affects the morale and retention of the remaining high-performing employees.
Employers who experience layoffs often see an increase in voluntary turnover among employees
they wanted to retain. This will also make the organization losses their big asset and expertise
that they wanted to retain. In order to overcome the negative feeling of employees, it is important
for the employers to help their employees to remain focus at work. Employers should
acknowledge the frustration and concerns of employees as well as find ways to maintain
employees confidence. This is crucial as when downsizing is the only way to solve the problem,
the retain employees will feel insecure because they are aware that one fine day, they might be
the one who will be terminated.

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It would be appropriate for every manager to educate employees that a downsizing exercise is a
shared problem, not one for employees to deal with individually. Rewards and recognition is
always important although organization has the critical time. Although company might have
tough time to pay bonuses or merit increment, but many recognition programs can be
implemented as a substitution to let employees know the management is aware of the added
burden and that the organization appreciate their hard work throughout their service time at
To be concluding, MAS need to be more integrated in a way they overcome the problem,
especially in the financial crisis. There is other way MAS can implement instead of downsizing.
This can be considered as ethical problem because it affects others especially the employees in
the organization. From the recommendation, MAS should emphasize more on employees
welfare as well as provide the job security towards their employees so that MAS will arise from
the problem that they are facing. Downsizing could be the last solution they might take. With the
support from the employees, the problem will be finding a way out. This is because without the
competent workers, MAS would not be a successful airline service in Malaysia particularly and

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1. Gandolfi, F. (2008). Reflecting on Downsizing : What Have Managers
Learned?. S.A.M. Advanced Management Journal, Vol. 73
2. Mochal, T (2003). Workforce Management, Professional Development, Recruitment and
Selection (http//www.search.techrepublic.com.com/ search/Tom Mochal.html)
3. Mone M.A. (1996). Relationship between Self-concept, Aspirations, Emotional
Responses and intent to leave a downsizing organization. Personnel Journal, 5,
4. Channel News Asia. Malaysia Airlines back in the black with record profit retrieved
from; (http://www.channelnewsasia.com)
5. The Star News. Malaysia Airlines to cut up 5,000 jobs retrieved from;
6. Business News. Crisis Hard on MAS retrieved from;

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