Question

El Eram Inc. is automating processes so the company can meet its demand with a smaller workforce. The CEO asks Monica, the vice president of human resources, for advice on how to address the resulting labor surplus. Monica studies the workforce and observes that many employees are in their 50s and 60s. Furthermore, these employees are the highest-paid workers in every job category. Based on this information, what should Monica suggest as the most effective way of addressing El Eram's labor surplus?

a. Retrain the older employees in order to make them to work more productively.
b. offer early-retirement incentives to the employees in their 50s and 60s
c. Replace the employees with contract workers.
d. Provide performance-based pay to increase production output by the employees.
e. The workforce should be downsized, with layoffs focusing on the older employees.

Answer 1

b. Offer early-retirement incentives to the employees in their 50s and 60s

Step-by-step explanation:

The most effective way of addressing El Eram's labor surplus is to offer early retirement incentives as it will allow employees in their 50s and 60s to leave the company avoiding negative consequences.

I think retrain the older employees and replace them with contract workers are not options to consider as there is a labor surplus and there is a workforce that is not needed. Provide performance-based pay to increase production output is not necessary because as it has been stated this is not a problem as the company is going to be able to meet its demand with a smaller number of employees. Also, layoffs are not the best option as employees will need to be compensated and this will cost a lot of money and could lead to legal problems for the organization.