Final answer:
To decide on a dismissal, a small firm should use a performance appraisal system based on job analysis and performance records to avoid the adverse selection of wage cuts and ensure fairness and alignment with business goals.
Step-by-step explanation:
When a small firm needs to dismiss one worker, the performance appraisal system should be used to make an informed decision. This appraisal system typically involves a formal process where employees are evaluated several times a year, based on their job analysis, set goals, and overall performance within the organizational culture. It is a critical tool for supervisors to communicate concerns, reinforce good performance, and document any poor performance that could justify terminations.
Using an effective performance appraisal system allows a firm to identify workers who might not be contributing optimally to the organization's goals. This decision should be based on documented performance and take into account the individual worker's job role, performance history, and the potential impact of their dismissal on the firm's operations. Furthermore, it helps avoid the adverse selection of wage cuts, where reducing wages broadly might result in the loss of the most skilled workers who have better alternatives elsewhere.
Adhering to a robust performance appraisal system is essential for any small firm facing the tough decision of laying off an employee. This ensures a fair process and protects the organization from potential biases and legal implications, while aligning with the overall strategic goals of the business.