Question

Read the following case and answer the questions provided after

Javier owns a custom print shop. His business has grown sufficiently to require a technical specialist. Javier posted an ad in an industry publication, sorted through twenty-nine resumes. He interviewed four people, giving each one the same industry-knowledge test. At the end of the process Javier made an offer to Kim.

Kim scored 96 out of 100 on the test, none scored higher. She’s been in the industry for more than 10 years, so Javier agreed to a salary that is slightly higher than average for the technical skills she brings to the firm. Kim has started work, and seems to be doing fine. The whole process, from placing the ad to making the hire, took about four weeks…. So far so good!

Three weeks after Kim’s hire, Javier received another resume via email. This guy had seen the ad but had been happily working in a neighboring town — until his boss called in all of the workers and told them the shop was out of work and out of money and they were all laid off.

The guy, Andy, has a decent resume, so Javier decides to call him in for an interview. Andy scores a 100 out of 100 on the test, completing it in half the time that Kim needed. Andy went to a highly respected technical college where he graduated top of his class. He has a wide range of skills, including some that Kim does not have. Andy’s past employers speak well of him. Given his current lack of employment, Andy is willing to accept 20% below Kim’s salary.

If Andy had sent Javier his resume three weeks earlier, he would have been the clear choice. Unfortunately, Javier’s current business volume only allows for one staff person; employing both of them is not feasible at this time.

Javier poses the following questions to you:

Would you fire Kim and hire Andy?

What are the ethical aspects of this decision?

What are the business and accounting issues to be considered?

Answer 1

Fire Kim and Hire Andy?

Javier has to consider it from different view points after considering for all likely impact to his business and reputation.

It won't be an excuse to fire Kim after employed for three weeks after qualifying interview and realises some other best suit is available(Andy). If it was during the interview period Andy was the likely selection but here it is not the case.

Terminating an employee should be on a fair basis and should have clear reasons and explanations for the termination.

Another option is to discuss the right concern with Kim and arrive at a suitable conclusion based on that discussion to offer Kim with desired redundancy package(short period employee usually doesn't has a redundancy pack). This specific situation requires such an offer to be made so that Kim accepts this decision.

Ethical Aspects Of This Decision?

What ever the decision is made Javier could asses the plan on ethical aspects. Even if Javier running a small custom printing shop sound of ethical practice is important for success of business in dianamic enviornment.

The culture of the business will be analysed based on what decision company takes on such instatnce remains a mark in company reputation.

Mutually accepted fair redundancy offered termination is better than sending off Kim without major issues only for the sake of financial gain of employer by employing Andy. Ethical judgement should be undertaken in this situation.

Business and Accounting Issues to be considered?

Business Issues

Andy has more potential than Kim in completing tasks effectively and quicker than kim. Employing Andy will increase the productivity of Print shop and thereby acheive good revenue in the industry.

Customers is concerened not only for the product they get for premium paid but also aware brand image and reputation of the firm. Effects of unfair termination such as, employees Association strike outbreaks and such a situations discredits the firm.

Future Expansion will also get effected by the decision made now. If Kim currently terminated unfairly and when times it require business to expand recruting will be a challenging task because of bad employee relationship record in the industry.

Accounting Issues

There is a potential cost saving by employing Andy rather than Kim by reduced cost of wage for employee. This will be an advantage for the shop.

Also capability of Andy makes production faster and cost effective as Low wastage based on skill.

Both gives a better financial result,But at the same time Reduandancy of Kim will araise as an issue. The package offered to Kim redunadancy could not exceeds the benefit expected from employing Andy.

A simple projected Cash flow analysis could have been conducted before offering Kim a Termination Package.