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HR Economics Essay - Doc

   

Added on  2020-04-29

14 Pages3149 Words35 Views
Running head: HR ECONOMICSHR ECONOMICSName of the StudentName of the UniversityAuthor’s Note

1HR ECONOMICSIntroduction The essay elucidates on the relationship between the pay and performance of theemployees in the organization. The employee’s rewards are reliant on the project completion andtheir job performance. The study also highlights on the objectives, goals and the functions of theAustralia’s Fair Work Commission (FWC). The FWC is an independent institution that carriesout the functions in relation to employment (Schmitt, 2013). The efficiency wage theory and theconcepts relating to general labor supply and backward bending supply curve is also explained inthis essay. The implementation of efficiency wage theory in the firms and the issues encounteredin it is also highlighted in this study. The recommendations on the efficiency wage theory arealso given in this study. Fair Work Commission in Australia The FWC mainly operates in social, industrial and economic environment, which is subjectto recurrent changes. The main objectives of Australia’s FWC are to provide fairness inworkplace and manage difficult circumstances in the business organizations. The goals of FWCare to recognize the diverse needs as well as expectations of the community and high compliancelevels with legislative obligations. Their strategic goals include- efficiency, innovations, risingaccountability and enhancing productivity. This independent body carry out certain functionsthat includes-Promote cooperative and prolific relations in workplaceResolve dismissal claimsSet national least wage

2HR ECONOMICSApproving the agreements of business enterpriseDeal with common protection claimsAssist with the resolution of organizational disputesAssist the bargaining procedure for agreements in business enterpriseThe free service that FWC provides includes-Educating Australians about fair practices in workBuilding strong relationships with the stakeholders and industryEnforce laws in workplace and deter employees in doing wrong thing in communityEvaluating breaches of laws in workplaceEfficiency wage theory, General labor supply and pay performance structure Efficiency wage theoryThe concept of efficiency wage theory explains that a company might benefit frombecoming highly productive if they pay their employees the wages that is higher than theequilibrium level. According to efficiency wage theories, the company benefits in four waysfrom less workers turnover, higher workers effort, skilled employees and rise in employee’shealth. These are explained as:Increase in workers effort level- This theory reflects that the employees whose wage is aboveequilibrium wage will put more effort than those employees who are paid less than theequilibrium wage. Moreover, the workers slack off as higher wage leads to increase inopportunity cost of job loss (Lavoie and Stockhammer, 2013) Hence, it can be stated that there is

3HR ECONOMICSa direct relationship between employees wages and their effort. The relationship between effortsper employees is given as-Ei= e[Wi/ We], where Ei= workers effort, Wi= Wage given by the company and We= Expectedexisting wage outside firm.Decline in employee’s turnover- This theory explains that the wage above equilibrium wagedecreases costly workers turnover. This explains that if the employees benefits outweigh cost ,then they will choose to stay. Analogously, if business cost outweigh their benefits, then theywill choose to quit. However, if the workers turnover decreases, then some resources might freedup and hence can be utilized in efficient processes.Rise in workers quality- It suggests that efficiency wages will attract highly skilled employees inthe business. The entity will offer efficiency wage to high quality workers in order to retain themin business (Shields et al., 2015). Thus, low quality workers will work for the equilibrium wageas high quality workers demand higher wages from the company.Improve in employee’s health- This explains that the employees who are paid higher wages willimprove their health and productivity. The reason behind this is that higher wage improves thestandard of living of the workers. However, this raises the employee’s quality of living, whichresults in better health. This improve in worker’s health increases productive than those workerswho are paid less wages.

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