The decision an employer has to make between cutting wages or cutting workers can be very difficult. However, during difficult economic times this can be something a manager has to work through. The decision should be based on what is best for the employees as a whole, and what keeps the business viable so that it can continue to provide jobs. Philippians 2: 3-4 teaches that we should selflessly look out for our fellow man (NASB). In following with this scriptures message, the employer should not look for the single right answer, but rather should assess the full situation in context of their unique environment and community. In this way, the employer can best get a realistic understanding of what will be the least detrimental changes to implement; thus find a solution that is supportive not destructive. If the business is being operated in a community that currently has a low unemployment rate, then perhaps lay offs will be the best option. However, if unemployment is high and the wage decrease is moderate, it may be a better option for employees to accept lower wages than unemployment. An article in the Harvard Business Review journal describes the detrimental effects of workforce layoffs, citing a 20% decrease in job performance in remaining employees that results in either no economic gains for the company or net-negative economic losses (Gupta, 2018). Regardless of the chosen approach to workforce change from the employer, employees should feel supported. In small businesses, the employer can speak directly with staff to hear their thoughts on which is the best of the two bad options. In a large corporation, employers need to be decisive and fair. One approach to gathering employee opinions is through company surveys. A survey of employee preference, and perhaps innovative ideas, would provide the employer with invaluable information upon which to make an optimal, well informed decision (Baye & Prince, 2017). Another clandestine possibility for the company could be to be creative, such as by offering early retirement to employees or by identifying other ways by which to reduce production cost or increase profitability.
References
Baye, M. R., & Prince, J. (2017). Managerial economics and business strategy (9th ed.). New York, NY: Richard D. Irwin, Inc.
Gupta, S. (2018). Layoffs that dont break your company: better approaches to workforce transitions. Harvard Business Review. https://hbr.org/2018/05/layoffs-that-dont-break-your-company
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