Bumping leads to ethical dilemma

Bumping results in a hurried process to implement staff reduction targets, dispose of big businesses in major markets, and lead mergers & acquisitions. Such actions create inherent conflicts of interest.

By Vidya Hattangadi

Bumping is a practice employed by many companies to reserve talent pool during downsizing, wherein a senior-level employee—whose position has been selected for removal—is offered the option of accepting an alternative position of lesser seniority within the organisation.

It essentially means the organisation replaces senior-level employees, who have become redundant in their profile, in alternate positions which are occupied by other employees. Redundancy can set in due to various reasons, such as commercial, employee morale, HR policy, etc. The questions to be answered are: Whether bumping is the only option available to employers? Can the organisation consider saving the jobs of a sluggish senior employee at the cost of younger, efficient junior employee?

Bumping is a process used by many organisations during downsizing to keep the valued staff by giving employees with seniority the option of taking other positions within the company that they are qualified for and that are currently held by employees with less seniority.

Thus, employees get a chance to ‘bump’ other employees out of their position, so it is the second employee that actually is made redundant. It is a useful tool for employers who want to hold on to the skills and experience of employees who would otherwise be downsized.

An employer can avoid bumping if it has good reason to do so. On the other hand, bumping can be used if the employer is able to show that the true reason for the dismissal of the bumped employee is redundancy and not any other (such as performance), which would take the dismissal outside the scope of redundancy and therefore make it potentially unfair. Bumping is a point to be considered under corporate governance of what principles should employers follow while identifying the selection pool for redundant employees.

On the flipside, many companies make the mistake of thinking that younger, less experienced employees will cost less than older employees who make more money. One fact cannot be overlooked that long-time employees are more knowledgeable, have built a wealth of knowledge about how to work most efficiently and know the customers. They have the past history of customers; what’s worked in the past, what hasn’t, and why. A younger, less experienced employee, eager to make his mark, may implement policies and procedures that have failed numerous times before, alienating customers and costing the company money. Therefore, it is better to avoid signalling to senior employees wrongly.

Even though organisations have considerable flexibility in determining the pool from which employees will be selected for redundancy, they must still consider being reasonable or running the risk that sacking will be deemed unfair. Companies often warp their own ethical climate by pushing too much change from the top, too quickly and too frequently. Bumping results in a hurried process to implement staff reduction targets, dispose of big businesses in major markets, and lead mergers and acquisitions. Such actions create inherent conflicts of interest.

When assessing if an organisation is being fair or reasonable in deciding on a selection pool of redundant employees, it is worth fixing a panel to decide parameters to term employees ‘redundant’ and to check whether other groups of employees are doing a similar work. And whether employees’ jobs are exchangeable and whether such transfers/exchanges are there in HR policies or not, and, whether employees are informed about such policies from time to time.

Common provisions in bumping rights
1. The provisions of bumping rights often include a clause requiring that a senior employee must have the minimum qualifications required to fill the position of the junior employee who will be laid off as a result of the bumping system.

2. The provisions may limit the type of positions that can be considered for bumping, such as only positions with the same job classification or title or only jobs with a lower job classification or title.

3. Some contracts include a provision regarding the refusal to exercise bumping rights. For example, there might be a clause that limits the number of job offers an employee can refuse before they are struck off the company’s re-employment register.

What does ‘subject to bumping’ mean?
‘Subject to bumping’ means that the employee holding the job in question is expatriate by another employee in terms of applicable bumping rights.

A business can have an established bumping system that is defined in the company policy, stated in a binding agreement between the employer and the employee, or in a union contract or collective bargaining agreement (CBA). The rules that afford an employee bumping rights will vary with each agreement.

Although the business world keeps talking about ethical values on various platforms, corporate ethical failures have become painfully common. The world over, billions of dollars have been paid in fines by corporates charged with ethical breaches. A survey conducted by the non-profit Ethics & Compliance Initiative, the National Business Ethics Survey, has found that the pressure employees may experience to compromise their organisation’s ethics standards, policies or the law is linked with an increased likelihood to observe misconduct. In brief, pressure goes hand-in-hand with higher prevalence rates of misconduct. Every employee in an organisation is exposed to the risk of facing an ethical dilemma at some point in time, and some ethical decisions can be more challenging than others.

Bumping can be a result of excessive pressure to reach unrealistic performance targets from the superiors. When imaginative goals are set, employees make compromising choices in order to reach targets, and this leads to poor appraisals, resulting in redundancy.

The author is a management thinker and blogger