Downsizing, Layoffs, and Employee Job Insecurity

1
Downsizing, Layoffs, and Employee Job Insecurity

• I used to work in an orange juice factory,
• until I got canned
• They said I couldn't concentrate.

2
Topics to Discuss

• Why focus on downsizing??
• Causes and consequences of job insecurity
• Moderators of job insecuritys outcomes
• Proposing solutions
• How (not) to conduct a layoff
• Steps in the layoff grieving process
• Some legal issues
• What about the survivors?

3
The Problem

• 500,000 layoffs annually (Simons, 1998)
• In 2001, 1.4 million layoffs
• Why?
• Persistent Conditions
• Commercial rivalries around the globe NAFTA
• Government deregulation of industry
• Organizational technology change
• Sporadic/Unexpected Events
• Terrorist attacks
• Soft economy

4
Causes of Job Insecurity
I used to be a lumberjack, but I couldn't hack
it, so they gave me the axe.

• Job Characteristics
• Contingent vs. Permanent
• Part-time vs. Full-time
• Union vs. Non-Union
• Organizational Technology
• Changing Technology
• Proximity of Job to Core Technology

• Worker Characteristics
• Performance
• Tenure
• Education
• Organizational Change Characteristics
• Announced Layoffs
• Upcoming Merger
• Organizational Restructuring

5
Consequences of Job Insecurity
I used to be a deli worker, but I couldn't cut
the mustard.

• Decreased
• Job Satisfaction
• Organizational Commitment
• Safety Compliance, Safety Knowledge, and Safety
  Motivation
• Physical and Mental Health
• Creativity
• Work Quality

• Increased
• Turnover
• Work Withdrawal Behaviors
• Negative Affective Reactions to Organizational
  Change
• Accidents, Injuries, and Near Misses
• Productivity

6
Some Moderators of Job Insecurity

• Things That Can Make It Worse
• Collectivist Cultural Values
• High Job Involvement
• Low Self-Efficacy for Adapting to Organizational
  Change

I used to be a stats professor until they
found out I had no class.
7
Proposing Some Solutions

• What is it about job insecurity??
• Uncertainty
• Lack of Control
• Lack of Communication
• Possible Loss of Job, Income, and Financial
  Security

I used to be a doctor, but I didn't have the
patients.
8
Possible Solutions

• How to Avoid Negative Effects of Downsizing
• Strong Organizational Safety Climate
• Participative Decision Making
• Good Organizational Communication

I used to be a barber, but they said I couldn't
cut it.
9
How Not to Conduct a Layoff
10
How (Not) to Conduct a Layoff

• Do
• Break the news individually and confidentially
• Explain why a downsizing is happening
• Describe what effect is expected on the
  organization
• Provide a timeframe
• Provide psychological and career counseling

• Dont
• Hoard information
• Escort employees out the door with security
• Let the news media break the story
• Cut jobs across the board. Rather, make the tough
  decisions to selectively cut jobs.

I used to be a musician, but the conductor said
I wasn't noteworthy.
11
How Will All The Work Get Done?

• Answer this question before you downsize!
• Imagine if your day was downsized by 20 to
  19.2 hours
• Where would you get the resources to complete the
  tasks that formerly took 24 hours?
• Would you cut all tasks by 20 or prioritize and
  skip unnecessary activities (e.g., the 30 minute
  snooze-button)?

12
Coping with Layoffs
I tried to be a tailor, but they said I just
wasn't suited for it.

• Stages of Grieving
• Denial Im sure the company will come to its
  senses
• Anger Directed toward organization, supervisors,
  and coworkers
• Fear How will I pay the billsfeed my family,
  etc.
• Acceptance Ok, its going to happen. What steps
  can I take to make this work out for the best?
• Tips for Laid Off Workers
• Tell your family
• Give yourself time to get through the grieving
  process
• Do not make any quick major life decisions in
  terms of changing career paths
• Do not make major purchases
• Explore with company officials what government
  services and resources might be available (e.g.,
  for job retraining tuition )
• Contact workforce development centers (e.g.,
  WorkSource)

13
Some Legal Issues

• WARN Act (1989)
• Worker Adjustment and Retraining Act
• Requires 60 days advance notice to all affected
  employees if
• Plant closing
• Major layoff
• If unionized, must
• give advance notice to union
• Allow it to participate in the development of a
  downsizing plan

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What About the Survivors?

• Survivor Syndrome
• More risk averse
• More stressed, anxious, cynical, etc.
• Greater role conflict and role ambiguity
• Lower self-confidence
• Lower creativity
• Reduced morale and job satisfaction
• The way you layoff workers has a huge impact on
  the reactions of your survivors

15
Group Activity

• Get into groups.
• At least one person should have been downsized
  or know someone who has been laid off.
• How were the layoffs announced?
• What services (if any) were provided?
• How did the company fare afterwards?
• What did the company do wrong?
• What could have been done better?