In human resource management employees’ hiring, payroll, compensation and benefits and training all are managed in order to make a person a resourceful candidate for the company. These tasks are costly and when an employee leaves the company, the company not only loses a valuable employee but also the investment made by company to make that person more effective. Therefore when hiring decision is made termination costs are also considered and this might impacts the hiring process (Gunderson, 2001). In ENM production manager was terminated because he was providing no benefits to the company. Compensation and salary costs were incurred without him delivering his objectives. This analysis of cost vs benefit made Carnegie fire Miller. Not only had this he hired incompetent people, who were his relatives, in the company increasing fixed costs for the company without benefit.

The economies of termination sometimes force employer to provide growth platforms and growth opportunities to employees like providing them with trainings and rotations in their desirable field. The high fixed costs associated with hiring permanent employees have encouraged employers to look for alternate solutions like contractual employees. The fixed costs also make companies force their employees to work for long and extended hours without being paid for overtime and describe commitment as a desirable employee characteristic, which in other words mean sitting late for work and not asking for vacations. The hiring cost have also made employers stringent in terms of workforce size and majority employers prefer to hire one person which should have been a job of two. Employers have also being known to have deferred their employees’ promotions and benefits due to higher costs.

[large]Psychology plays an important role in determining how a person would react to different situations facing him in the workplace. This is the reason why interviewers stress a lot on behavioral questions, they try to gauge if the person is an organizational fit or not. Different people are motivated by different factors and it depends on their personality, some feel satisfied when they are paid well, for some appreciation from their boss matters a lot, others just feel that if their job is enriching and fulfilling then it is perfect for them. (Rasim, 2008) . Leadership, the phenomenon which we all hear about all the time, depends on how closely followers monitor their leader, how much do they understand him and respect his abilities to lead them. Effective leadership occurs when followers voluntarily agree to what their leader says. This doesn’t mean that followers should agree to even the illogical and irrational things their leaders say. In this case Miller h bought loyalty of his people by hiring his own relatives and now they were protesting against his termination. Psychology impacts how an individual will behave with his/her colleagues, the interpersonal skills of a person is shaped by psychology. If a person is insecure and lacks certain skills that he/she feels his/her subordinates possess, then he/she is definitely going to give them a tough time. Doubting their every intention and fearing that they might take over his/her position one day. When selecting candidate for a position, psychology plays a critical role. Most of the time interviewer acts on certain perceptions and go through the process trying to confirm those perceptions. Many times a good potential candidate does not make through the process because of interviewer’s bias.


Gunderson, M. (2001). Economics of personnel and human resource management. Human Resource Management Review , pp. 431 – 452.
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Rasim, T. S. (2008). The Role of Psychology in Human Resources Management. Europe’s Journal of Psychology .
Tanner, R. (n.d.). Motivation – Applying Maslow’s Hierarchy of Needs Theory. Retrieved June 11, 2016, from Management is a Journey: