Dealing with labor surplus
Assume an organization is facing a labor surplus. What would be the organization’s consideration for downsizing? Identify why it would be in their best interest to use an alternative method other than downsizing to reduce this surplus? Explain how this alternative method may affect employee behaviors.
Sample Answer
here are some considerations for an organization facing a labor surplus:
- Financial considerations: Downsizing can save the organization money in the short term, but it can also have long-term financial costs. For example, the organization may have to pay severance packages to laid-off employees, and it may lose productivity and morale.
- Legal considerations: Downsizing can be a legal minefield. The organization must be careful to comply with employment laws, such as those related to discrimination and wrongful termination.
- Public relations considerations: Downsizing can damage the organization’s reputation and make it difficult to attract and retain top talent in the future.
- Employee morale: Downsizing can demoralize employees who remain with the organization. They may feel that their jobs are not secure, and they may be less productive.