Costs of termination
The truth is that the firing of these staff members will not only not solve the problem, it will cause a manifold of others. Why will it not solve the issue? The cutting down on lower level staff represents a fraction of the total costs of salaries and wages. The number of employees set for termination can be kept on roll with minimal costs. Secondly, by laying them off, you will have to incur the costs of termination. You have to consider that you will later on pay the termination benefits for those working on a fixed contract.
This indeed is counter productive especially in the case of those employees with large benefits due to their long service records. This indeed shows that the decision to lay off is more expensive than bearing through this period with them. The problems such a move will cause are, as stated, manifold. The first problem is that it will cause a threat to the job security of employees at the lower and middle level employment brackets. This is bad as it reduces the employee commitment to the business. This is not ethical as the employer ethically owes the employee a level of job security (The Times 100, 2008).
Decreased employee commitment may lead a higher labor turnover. High labor turnover results from the migration of employees in search of better working conditions and job security. Employee insecurity is a major concern factor to the employees and will factor heavily in their consideration of a job offer. If the employee is not secure in the place he is working, he is most likely to start hunting for other job offers. In our situation, there are fewer job offers now for low and middle level workers due to the economy’s situation.
However, this is still of concern as we will have lost out on employee confidence. This will not have a good effect on the morale of the employees and consequently the output. The employee must work with much more than just his/her hands; they must work with their hearts. It is the management’s responsibility to keep the morale of his employees up as stated by Henry Fayol. His principle of security of tenure captures the concept I am trying to explain, that the employee will work better once he/she is more settled.
An employee study done in various European countries concluded that there exists a positive correlation between the stability of tenure and productivity. The study designed to discover this relationship uncovered this truth that higher labor turn over results in a drop in production (Auer P. , Berg J. and Coulibaly, 2004). The other problem highly related to the first is the view of management as having double standards. This will occur because of the following events. The management will dismiss the “auxiliary” work force in order to cut down on costs.
This will now cause the work force levels affected to become jittery over their future prospects in the company. The result will be reduced morale and reduced output as a result. The economic situation will eventually improve due to the enormous worldwide efforts to make this history. The hotel will again pick up in terms of demand and require the service of the labor that was released. They will hire new labor. When new labor is added after such a short time, a span of about a year, the employees will become very speculative if this economical incident repeats in future.
The employee will read that they are as expendable as the whims of the global economy and start to worry. They will also not understand why there was replacement so soon. Throughout this time, the management will be stating their undying commitment to employee affairs. This may be seen as a case of double standard applications where on one hand you claim that there is adequate employee consideration while on the other hand you do not hesitate to throw them away during a little strain.
this lip service charade will be easily read by the employees as double standards. Double standards do not work well in boosting employee confidence in the ability of their employer to make both ethical and rational decisions. Reduced confidence will worry them about their futures and wellbeing in the organization. Their well being will be put to task over the way management sees them as expendable and thus will make them feel subordinate and unnecessary. I do not have to tell you the morale damage this kind of mindset will have on the workforce.