Final answer:
Nahim is involved in human resources and dealing with workforce reduction, where layoffs are contemplated. Companies tend to avoid layoffs to retain skilled workers and instead might offer buyouts. Firms balance cost savings with the need to maintain a talented workforce during economic downturns.
Step-by-step explanation:
The process Nahim works with in human resources involves making tough decisions about workforce reduction, which affects both the hiring practices and the retention of employees. During times such as the onset of a recession, companies may face weaker demand for their products or services, prompting them to consider layoffs to reduce costs. However, layoffs can lead to the risk of losing key talent, as the best employees with more opportunities elsewhere are often the first to depart. This is known as the adverse selection of wage cuts. To mitigate such risks and maintain a skilled workforce, companies might offer incentives for voluntary separations like a buyout, which includes a severance package based on the number of years of service plus extended benefits.
In addition, firms often hesitate to lay off workers or reduce wages across the board as they might incur higher costs in the future for recruiting, hiring, and training new employees. Moreover, strict labor laws in some European countries that impose substantial costs for laying off workers also discourage the practice, influencing companies to use strategies that emphasize employee retention. To attract and retain the best employees, firms need to balance between cost-cutting measures and maintaining a talented and experienced workforce. This is a delicate balance that requires careful strategy and planning in the field of human resources.