I am looking for the possible labor market factors ( in addition to tight labor market) which affect the decision of a firm how to treat its employees. I would be glad if you suggest some related articles.
Employee treatment could include both material as well as non-material factors.
Under the ordinary micro-economic analytical frame, a firm's objective function is profit maximization. While wage is seen as a cost, and by implication it needs to be minimized, this cost is however weighed against the benefits. Seen this way, 'employee treatment' needs to be seen as having both cost, productivity and revenue consequences.
1. Incentives linked to efficiency wage like effects;
2. Expected search and replacement costs (avoiding high turnover of rare skilled workers who might value 'treatment') including technical substitution possibilities;
3. Expected costs due to industrial dispute (organized worker's unions valuing treatment) and therefore whether response systems exist to voice function in the organization;
4. Expected litigation costs from regulation standards that might include clauses on unfair treatment ;
5. Expected reputation costs or loss of revenues due to fall in demand (consumer activism);
6. Employee Treatment and Cooperation: Nature of the market uncertainties in terms of business cycles in the particular industry and the value assigned to workers' cooperation for the firm to cope with it over the life time of the firm itself - possibilities for deriving flexibility through worker cooperation following the goodwill acquired from type of treatment;
7. Expected costs and risks from outsourcing as against the cost efficiency derived from it and to produce in societies where norms and regulations having lower standards in terms of employee treatment.
These are some factors that come to mind. The literature on each of these aspects is enormous, to therefore suggest one or two articles may not be possible.
As per my experience and opinion as a recruiter and Human Resource professional, following factors are affect employee treatment, , also it depends on organisational values and own norm and treatment is dependent on its cultural or founder values:
Field of employee expertise, and his level of experience if his or her filed is rare in market or easily available than, if it is rare and specialized he is star who should be taken care off ,if his or her skills are readily available within org or labour market, employers do not care, and treat according.
Also if organisational core function is engineering or IT than core like high tech eng or IT developers skills are treated as key employees,other support services like HR,marketing , logistics are treated as support employees who can be replaced very easily.
Also organisational culture or embedded norms ot attitude in hierarchy,Managers in organisations guide and affect employee treatment.