Final answer:
In determining who to lay off to ensure profitability, performance appraisals are a likely criterion to retain top talent and maintain operational effectiveness. While additional costs, like severance and outplacement services, are factors, they influence the financial side rather than employee selection criteria.
Option 'C' is the correct.
Step-by-step explanation:
When a corporation determines that layoffs are required in specific business units to remain profitable, the human resources (HR) director is often tasked with developing the criteria for selecting which employees will be laid off. Performance appraisals from the targeted business units would likely be a primary criterion.
Performance-based criteria are critical as they help ensure that the company retains its most valuable employees, who contribute most significantly to the company's success and profitability. This approach also aligns with the adverse selection of wage cuts argument, which suggests that across-the-board wage reductions can lead to the exit of top performers, leaving behind those with fewer employment alternatives.
Other financial considerations, such as the costs associated with severance packages, outplacement services, and unemployment compensation, along with company costs for COBRA to continue health benefits for laid-off employees, are relevant.
However, these are secondary considerations that impact the financial aspects of the layoff process rather than the criteria for employee selection. To avoid adverse long-term effects on the company, such as higher natural rates of unemployment, as illustrated by labor market dynamics in countries like France, careful selection based on performance is essential.