The productivity of labor in any company should be cost effective. The input of labor is associated with costs which should linearly relate to the labor output value. Labor management in any business organization should be dictated by the size of the organization. Therefore the highly skilled and expensive labor management modes are best suited for big forms rather than small firms.
The level of capital intensiveness is also a clear guide to the HRM practice applicable in any business organization. For healthy cost effectiveness in labor, the existing workers should be handsomely remunerated, offered internal trainings in the work place, their skills tapped to the maximum and uplift their working morale. This essentially reduces the company’s labor costs on individual perspective and increases productivity (Boxall & Purcell, 2002).
Organization Flexibility: The company should target the profit margin while utilizing the labor resource. Much productivity should be achieved while the cost of labor should be competitive. Flexibility has been taken from the point of both financial and numerical (head count) perspectives. For appropriate coping with the flexibility in the company, both short-turn and long-term measures are at the disposal of the managerial entity of the company (Boxall & Purcell, 2002).