Hiring Decisions In a typical hiring scenario, an employer must decide whether t

Question

Hiring Decisions

In a typical hiring scenario, an employer must decide whether to hire someone for a position, and who that person should be. This leads to all sorts of challenges. Consider the following scenario:

A company that manufactures kloycks has to decide whether to hire skilled workers or unskilled workers. (For simplicity, we will assume that there are exactly two skill levels – unskilled and skilled – and that both the worker and the company know who is skilled and who is unskilled ahead of time.) The company knows that skilled workers can produce 6 kloycks per hour and unskilled workers can produce 4 kloycks per hour. Furthermore, the company knows that the skilled worker’s next best job opportunity pays $20 per hour and that the unskilled worker’s next best opportunity pays $16 per hour. There are no other marginal costs associated with kloyck production.

If the firm were to pay an hourly wage, which worker makes more sense to hire, the skilled or unskilled workere? Explain.

For the scenario presented above, suppose that the firm knows that there are skilled and unskilled workers but is unable to distinguish between them. Determine a piece rate that will result in only skilled workers taking the job. (A piece rate is a fixed amount the firm pays the employee per kloyck produced.)

Explanation / Answer

It makes more sense to hire the skilled worker than the unskilled worker. This is majorly because the skilled worker has more knowledge experience and expertise in production of the kylocks far much better unskilled workers. In addition to that, skilled workers are able to quickly know the faults on lylocks or during production and rectify them meaning that the company will not require to hire a technician to make small repairs and maintenance compared to unskilled workers who lack sufficient knowledge about the kylocks forcing the company to hire personnel for maintenance and repairs thus incur extra costs. Furthermore, skilled workers produce more per hour than unskilled workers. This gives the company a competitive edge because of the production power and capacity and is likely to run out of stock. The difference of only $4 in hiring a skilled worker than unskilled worker is a small price to pay considering tht the company will eliminate the chance of falling short of stock for supply or sales. Despite the fact that the skilled worker attracts more pay per hour, it is absolutely reasonable to hire skilled workers given that they have a lot more advantages than unskilled workers.

Given that the piece rate is a rate of payment for piecework, the firm can decide to give a skill test job for the purpose of determining the skills of workers. After an hour, workers with more kylocks produced are skilled workers and will have the higher piece rate while workers with less kylocks are unskilled laborers with low piece rate.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.