At a management luncheon, two managers were overheard arguing about the follow- ing statement: “A manager should never hire another worker if the new person causes

diminishing returns.” Is this statement correct? If so, why? If not, explain why not.

I think it's correct because employees should add to the effectiveness of an organization.

What do you think?

I think it could be both true and false

To determine if the statement "A manager should never hire another worker if the new person causes diminishing returns" is correct or not, we need to understand the concept of diminishing returns and its relation to hiring new workers.

Diminishing returns occur when the additional output or productivity gained from adding one more unit of a resource (such as a worker) decreases after a certain point. In other words, the marginal benefit of hiring an additional worker becomes smaller compared to the marginal cost.

To evaluate the statement, managers should consider the following factors:

1. Productivity: If the new worker increases the overall productivity of the team and contributes positively to the output, then this would not result in diminishing returns. Hiring such a worker would be beneficial.

2. Resource utilization: If the addition of a new worker exceeds the available resources, such as workspace, equipment, or supervision capacity, it may lead to diminishing returns. In such cases, hiring another worker would not be advisable.

3. Specialization and division of labor: If hiring a new worker allows for specialization and helps to divide the workload more efficiently, it can lead to increased productivity and not result in diminishing returns.

4. Costs: Hiring a new worker involves costs such as salary, benefits, recruitment, and training expenses. If the additional cost outweighs the benefits gained from their productivity, it may lead to diminishing returns.

Based on these factors, the statement itself is incorrect. It is not a blanket rule that a manager should never hire another worker if it causes diminishing returns. Instead, a manager should carefully assess the potential impact on productivity, resource utilization, specialization, division of labor, and costs before making a hiring decision.