Description
As an employer wants to reduce the production cost during the economic recession, he/she could choose to (1) lay off some workers without changing wages or (2) keep all workers but cut wages for all. Which method would you choose? Why?
Additional information:
- "Masters, provide your slaves with what is right and fair, because you know that you also have a Master in heaven" (Colossians 4:1, NIV).
- "Look at the birds of the [a]air, that they do not sow, nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not worth much more than they?" (Matthew 6:26, NIV).
- "He who oppresses the poor taunts his Maker, But he who is gracious to the needy honors Him" (Proverbs 14:31, NIV).
- "…Encouraged by Wall Street investors, many companies over the past decade have slashed their full-time workforces, reduced benefits and demanded more output from the remaining workers…Many workers sense that they’re merely expendable components of an impersonal production process involving the manipulation of employees for the sole objectives of the maximization of profit and shareholder value.” — John Stapleford, Bulls, Bears, and Golden Calves. IVP Academic (p. 104)
Reply
Castillo
Due to the current pandemic, many large organizations have decided to reduce wages or lay off workers due to the economics downfall. Between the two options, it would be wise for an organization to reduce wages rather than opting for layoffs. This will ensure that the employer has a job during the recession or in this case a pandemic which will help those individuals pay bills and supply food. In addition, hiring new employees in a foreign country for a lower wage compared to the U.S. would not be wise due to the time to train those employees. Several organizations have decided to hire employees where the cost to employee that individual is cheaper than the U.S. due to all the costly benefits. Therefore, reducing the wages can be applied by removing the bonus, reducing percentage for 401k and salaries. The CEO and managers will need to constantly motivate the employees in performing well and meeting the organizations goal during the recession.
Organizations must be prepared for a recession or pandemic as both affect the economy which affects the employees and the firm. “Recessionary actions should in practice reduce some of the organizational slack or X-inefficiencies in the organization unless the changes are simply adjustments to meet declining demand” (Wood & Ogbonnava, 2018, p. 3073). Once the recession period is over, the firm will not encounter any additional cost since all the employees are still with the organization. Overall, this will help the organization learn how to use this experience for any future recession as its essential to provide a job to current employees. Ultimately, each organization will use a different option based on the funds that can be used to pay the employees. The bible includes different verses that reminds that each person should be valued and provided the truth. Isaiah 52:13 states, “See, my servant will act wisely, he will be raised and lifted up and highly exalted” (New International Version, 2011). This is a verse that in every trail we encounter he will be with us through it all.
References
New International Version. (2011). Bible Gateway. https://classic.biblegateway.com/ (Original work published 1978).
Wood, S., & Ogbonnaya, C. (2018). High-involvement management, economic recession, well-being, and organizational performance. Journal of Management, 44(8), 3070-3095. https://doi.org/10.1177/0149206316659111
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Explanation & Answer
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Running head: CUTTING COSTS
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Cutting Costs
Student’s Name
Institution
Date
CUTTING COSTS
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Cutting Costs
Business leaders find themselves at crossroads regarding decisions they have to make
concerning their employees during hard economic times. Whether to reduce workers' wages or
lay off some workers to break even is an intricate affair to execute. In this regard, as an employer
who intends to minimize production costs during an economic recession, I would initiate
temporary layoffs for some employees while the remaining employees will continue working at
normal pay. I discern that terminating employees espouses negative effects on these employees
(Lee & Sanders, 2013). In most instances, permanent layoffs offer minimal hope for
reinstallations into an establishment that is downsizing. However, I suppose that reducing the
remuneration for all the employees would espouse amplified negative effects with the
establishment facing a greater risk of losing most of its workforce. As such, the establishment is
bound to encounter economic turbulence, which would result in a fatal employee turnover and
enhanced worker dissatisfaction. Nevertheless, little research has been conducted on the
influence of lay off on employees.
Even though a layoff espouses its negative influences, the gain to the employer is the
potential to maintain most workers while awaiting economic recovery to take place.
Establishments can align their production to the reduced workforce, and the laid-off employees
might be reinstalled into their earlier positions once an improved financial outlook returns. Either
way, the laid-off and those on abridged pay suffer the impacts of reduced earnings and must rally
to mend the intricacies emanating from income diminution. Managers and business leaders must
have the establishment's and share holders' best interests at heart while arriving at such a decision
because such decisions can have far-reaching connotations.
CUTTING COSTS
3
References
Lee, S., & Sanders, R. (2013). Fridays are furlough days: The impact of furlough policy and
strategies for human resource management during a severe economic recession. Review
of Public Personnel Administration, 33(3), 299-311.
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Running head: CUTTING COSTS
1
Cutting Costs
Student’s Name
Institution
Date
CUTTING COSTS
2...
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