1. When a seemingly secure job or a job with opportunities for advancement becomes an insecure job at a shrinking company, has the employer broken a promise? Why or why not?
2. What ethical obligations, if any, does a company have to employees when it falls on hard times? In what ways, if any, are those obligations different if the hard times are the result of managers' or employees' unethical conduct?
3. How can a company such as AIG apply principles of fairness to employees during downsizing and restructuring? What impact do you think those efforts would have on employee retention?

When American International Group (AIG) got into financial trouble with risky investments gone bad, the federal government came to the rescue, making loans aimed at limiting the spread of the financial crisis. AIG embarked on the complex process of restructuring the company so that it could return to profitability and repay the loans, but meanwhile the public was furious about the bailout and the bonuses paid to AIG executives in spite of the company's collapse.
Imagine the human resource management challenge facing that company. Employees-many of them involved in the company's insurance business unrelated to the financial fiasco-are embarrassed, afraid, and doubtful they will be able to ever enjoy the career path, pay, and benefits they had expected, even if they keep their jobs.
While AIG's situation is notorious and extreme, from an HR perspective, it is only a more intense version of a situation that faces many employers when they run into financial difficulties. To lure the most talented people, companies look at their financial situation and offer pay, benefits, and working conditions they can afford.
They may discuss promotion opportunities based on the company's expected growth. Whether or not the company makes promises in a strict legal sense, employees look around and see opportunities they once believed in beginning to disappear. Employers typically respond by urging employees to work harder, make do with less, and trust management's reassurance that the difficult times will pass.