Question

Ernie, a manager at a large decoration store, is expecting increased sales during the upcoming holiday season. He knows that his current workforce will not be able to meet demand, putting him at risk of a labor shortage. Which strategy would be the best option to help Ernie avoid a labor shortage?

A) Ernie should hire new employees because he will most likely need additional workers after the holiday season to deal with an increasing sales trend.
B) Ernie should increase his current employees' pay during the holiday season so they will work harder to achieve sales targets.
C) Ernie should keep his store closed during non-peak hours to compensate for labor shortages. This will ensure his current employees work harder during peak hours.
D) Ernie should hire temporary employees because he can let them go once the holiday season is over.
E) Ernie should consider increasing the prices of toys so he can make higher profits with fewer sales, thereby reducing the number of customers and consequently solving the labor shortage issue.

Answer 1

Option D Ernie should hire temporary employees because he can let them go once the holiday season is over.

Step-by-step explanation:

Option D. The reason is that this option possesses the least risk that the company will loose money and with higher return opportunity associated with it that it make money during the holiday season.

Option A. If company hires permanent workers then the company will have to pay them irrespective of the production so their is a higher risk with a greater return opportunity to meet demands.

Option B. Remember that the money doesn't keeps the employee motivated for a long duration. It objects the employee to leave the company because the employee is a key resource to the organization. So productivity cannot increase significantly to meet demand by increasing pay and the company will have to pay the remaining months the same pay which is meaningless to loose money instead of making money.

Option C is totally incorrect because if the company keeps its store closed it is making fewer sales and giving an edge to build relation with its existing customers . So again its risky proposal.

Option E is also incorrect because setting high prices without any differentiation in the product will result in fewer sales target achievements. So it is again riskier proposal.