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In order to determine if the employee should have been terminated or not, more information is needed. Based on the information presented in the case, the newest worker's labor is evidently not on par with his colleagues'. This sole fact does not suffice in condemning a worker to unemployment. If the data provided by the accounting department is only a direct comparison of labor output between the newest employee and the more experienced other workers in a given time frame, the new employee's numbers should be treated as a rough draft. Before termination, several other steps can be taking, such as more training, supervision, or a performance improvement plan.

However, the data provided by the accounting department may be more substantial in their analysis of the company's workforce and output. Baye and Prince (2013) showcase how the steady addition of labor initially increases marginal returns, adding too much labor will eventually decrease marginal returns. With this concept in mind, the newest employee may simply be the turning point in marginal return for the company and the specific product.

As with the first scenario, in the second situation termination of the employee would also not be a first-choice reaction. Instead, the employee could be moved to another project where the employee's labor input benefits the company's production output more positively.

Reference

Baye, M. and Prince, J. (2013).Managerial Economics and Business Strategy. Boston: McGraw-Hill Irwin.