DISCUSSION BOARD 4
2
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)
During an economic recession, businesses face the challenging task of reducing costs while maintaining operational efficiency. Many times, personnel decisions are at the top of the list when deciding where to start. There is the option to layoff workers and leave wages unchanged or the option to keep all workers and decrease wages. In my opinion, laying off some workers without changing wages is the better strategic decision. This approach allows the company to streamline its workforce to match the reduced demand for goods or services during the recession period. Aligning the labor force with the decreased level of production due to demand helps avoid overstaffing in turn reducing unnecessary labor costs. This adjustment helps to preserve the financial stability of the company and ensures its long-term viability in the face of economic downturns.
Laying off workers without changing wages allows the company to retain its most skilled
and valuable employees. By selectively reducing the workforce based on performance and job requirements, the company can retain employees who contribute the most value to its operations.
This strategic approach ensures that the remaining workforce is well-equipped to meet the company's production needs efficiently. In contrast, retaining the existing workforce but cutting wages for all employees may have detrimental effects on morale and employee motivation. A widespread wage reduction can lead to feelings of demotivation, dissatisfaction, and even resentment among employees. This could negatively impact productivity, quality of work, and overall employee morale, further exacerbating the challenges faced by the company during the recession. () conducted a study and seventy percent of business managers in the study chose to layoff and not cut pay because they were “concerned about a possible negative effect on employee morale” (p. 26-27), with 60% of them believing it would lead remaining employees to quit. In conclusion, during an economic recession, the decision to lay off some workers without changing wages can be a good strategy for businesses aiming to reduce production costs
