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.
Gunderson, M. (2001). Economics of personnel and human resource management. Human Resource Management Review , pp. 431 – 452.
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