Downsizing, layoffs, re-engineering, reshaping, reduction in force (RIF), mergers, early retirement, and outplacement—the description of these increasingly familiar changes has become a matter of commonplace jargon around the world in the past two decades. As companies have fallen on hard times, workers at all organizational levels have been expended and many remaining jobs have been altered. The job loss count in a single year (1992–93) includes Eastman Kodak, 2,000; Siemens, 13,000; Daimler-Benz, 27,000; Phillips, 40,000; and IBM, 65,000 (The Economist 1993, extracted from “Job Future Ambiguity” (John M. Ivancevich)). Job cuts have occurred at companies earning healthy profits as well as at firms faced with the need to cut costs. The trend of cutting jobs and changing the way remaining jobs are performed is expected to continue even after worldwide economic growth returns.
Why has losing and changing jobs become so widespread? There is no simple answer that fits every organization or situation. However, one or more of a number of factors is usually implicated, including lost market share, increasing international and domestic competition, increasing labour costs, obsolete plant and technologies and poor managerial practices. These factors have resulted in managerial decisions to slim down, re-engineer jobs and alter the psychological contract between the employer and the worker.
A work situation in which an employee could count on job security or the opportunity to hold multiple positions via career-enhancing promotions in a single firm has changed drastically. Similarly, the binding power of the traditional employer-worker psychological contract has weakened as millions of managers and non-managers have been let go. Japan was once famous for providing “lifetime” employment to individuals. Today, even in Japan, a growing number of workers, especially in large firms, are not assured of lifetime employment. The Japanese, like their counterparts across the world, are facing what can be referred to as increased job insecurity and an ambiguous picture of what the future holds.
Job Insecurity: An Interpretation
Maslow (1954), Herzberg, Mausner and Snyderman (1959) and Super (1957) have proposed that individuals have a need for safety or security. That is, individual workers sense security when holding a permanent job or when being able to control the tasks performed on the job. Unfortunately, there has been a limited number of empirical studies that have thoroughly examined the job security needs of workers (Kuhnert and Pulmer 1991; Kuhnert, Sims and Lahey 1989).
On the other hand, with the increased attention that is being paid to downsizing, layoffs and mergers, more researchers have begun to investigate the notion of job insecurity. The nature, causes and consequences of job insecurity have been considered by Greenhalgh and Rosenblatt (1984) who offer a definition of job insecurity as “perceived powerlessness to maintain desired continuity in a threatened job situation”. In Greenhalgh and Rosenblatt’s framework, job insecurity is considered a part of a person’s environment. In the stress literature, job insecurity is considered to be a stressor that introduces a threat that is interpreted and responded to by an individual. An individual’s interpretation and response could possibly include the decreased effort to perform well, feeling ill or below par, seeking employment elsewhere, increased coping to deal with the threat, or seeking more colleague interaction to buffer the feelings of insecurity.
Lazarus’ theory of psychological stress (Lazarus 1966; Lazarus and Folkman 1984) is centred on the concept of cognitive appraisal. Regardless of the actual severity of the danger facing a person, the occurrence of psychological stress depends upon the individual’s own evaluation of the threatening situation (here, job insecurity).
Selected Research on Job Insecurity
Unfortunately, like the research on job security, there is a paucity of well-designed studies of job insecurity. Furthermore, the majority of job insecurity studies incorporate unitary measurement methods. Few researchers examining stressors in general or job insecurity specifically have adopted a multiple-level approach to assessment. This is understandable because of the limitations of resources. However, the problems created by unitary assessments of job insecurity have resulted in a limited understanding of the construct. There are available to researchers four basic methods of measuring job insecurity: self-report, performance, psychophysiological and biochemical. It is still debatable whether these four types of measure assess different aspects of the consequences of job insecurity (Baum, Grunberg and Singer 1982). Each type of measure has limitations that must be recognized.
In addition to measurement problems in job insecurity research, it must be noted that there is a predominance of concentration in imminent or actual job loss. As noted by researchers (Greenhalgh and Rosenblatt 1984; Roskies and Louis-Guerin 1990), there should be more attention paid to “concern about a significant deterioration in terms and conditions of employment.” The deterioration of working conditions would logically seem to play a role in a person’s attitudes and behaviours.
Brenner (1987) has discussed the relationship between a job insecurity factor, unemployment, and mortality. He proposed that uncertainty, or the threat of instability, rather than unemployment itself causes higher mortality. The threat of being unemployed or losing control of one’s job activities can be powerful enough to contribute to psychiatric problems.
In a study of 1,291 managers, Roskies and Louis-Guerin (1990) examined the perceptions of workers facing layoffs, as well as those of managerial personnel working in firms that worked in stable, growth-oriented firms. A minority of managers were stressed about imminent job loss. However, a substantial number of managers were more stressed about a deterioration in working conditions and long-term job security.
Roskies, Louis-Guerin and Fournier (1993) proposed in a research study that job insecurity may be a major psychological stressor. In this study of personnel in the airline industry, the researchers determined that personality disposition (positive and negative) plays a role in the impact of job security or the mental health of workers.
Addressing the Problem of Job Insecurity
Organizations have numerous alternatives to downsizing, layoffs and reduction in force. Displaying compassion that clearly shows that management realizes the hardships that job loss and future job ambiguity pose is an important step. Alternatives such as reduced work weeks, across-the-board salary cuts, attractive early retirement packages, retraining existing employees and voluntary layoff programmes can be implemented (Wexley and Silverman 1993).
The global marketplace has increased job demands and job skill requirements. For some people, the effect of increased job demands and job skill requirements will provide career opportunities. For others, these changes could exacerbate the feelings of job insecurity. It is difficult to pinpoint exactly how individual workers will respond. However, managers must be aware of how job insecurity can result in negative consequences. Furthermore, managers need to acknowledge and respond to job insecurity. But possessing a better understanding of the notion of job insecurity and its potential negative impact on the performance, behaviour and attitudes of workers is a step in the right direction for managers.
It will obviously require more rigorous research to better understand the full range of consequences of job insecurity among selected workers. As additional information becomes available, managers need to be open-minded about attempting to help workers cope with job insecurity. Redefining the way work is organized and executed should become a useful alternative to traditional job design methods. Managers have a responsibility:
- to identify and attempt to alleviate sources of job insecurity among workers
- to attempt to encourage feelings of being in control and of empowerment in the workforce, and
- to show compassion when workers express feelings of job insecurity.
Since job insecurity is likely to remain a perceived threat for many, but not all, workers, managers need to develop and implement strategies to address this factor. The institutional costs of ignoring job insecurity are too great for any firm to accept. Whether managers can efficiently deal with workers who feel insecure about their jobs and working conditions is fast becoming a measure of managerial competency.