¶ … multiple elements in the company's environment that Scott must consider in his plan. The first is the needs of the shareholders. He is ultimately responsible to the shareholders for corporate performance. The move to cut workers must be made in context of the long-term best interests of the company. His second most important obligation is to Ms. Deason. As his supervisor, she has the capacity to mandate such changes. However, Scott has the capacity to influence her decision and the method by which it is implemented. A strong case presented to her could change the decision. The third group of stakeholders is the employees, both the ones being let go and the one remaining. Their needs are important for two reasons. One is that they may be hired back in future. The other is that the treatment of the employees will affect how the move impacts on the remaining employees. Other stakeholders are more minor -- the interests of the surrounding community and its leaders are almost irrelevant in the scheme of the firm's overall business. Thus, the first three all have legitimate interests, but other interests are clearly subordinated.
2. Scott's first interest is to the shareholders. Management's role is to act in the best interest of the shareholders -- that is the proxy relationship between management and owners. However, this does not mean that the senior employees should be cut. The choice of employees to be cut should be based on productivity vs. cost, not just on a cost basis. The majority of the shareholders should be considered, rather than a vocal minority. In addition, the interests of the shareholders should be considered on a long-term basis. This may guide Scott to a different decision than that which he is being presented. Ultimately, however, both Ms. Deason and the employees are also agents of the shareholders so in a way all parties involved are bound to consider the benefit to shareholders above all else.
