The determinants of organizations' usage of employee dismissal: Evidence from Australia

Substantial variation exists across organizations in their use of dismissal. While it has been suggested that this variation reflects organizational-level factors relating to disciplinary issues, little evidence exists regarding the effect of these factors. Using data from 1,596 workplaces in the Australian Workplace Industrial Relations Survey, we examine how organizational-level factors that reflect the incidence of disciplinary problems as well as the expected costs and benefits of dismissal are related to dismissal usage. For each organization, data were collected on organizational characteristics and practices in interviews with the employee relations manager and the senior line manager. Data were also collected on whether or not dismissal was used by the firm and on the number of employees dismissed. Using both logistic regression and tobit analysis, our results suggest that dismissal is affected by procedural and institutional restrictions on the use of discipline, interactions among those restrictions, compensation level, labor market factors, work force human capital, operating capacity, work group influence, the use of incentive pay, work force size, and industry classification.