The interactive effects of job insecurity and organizational cynicism on work effort following a layoff.

The widespread layoffs of the past 25 years have caused unparalleled levels of distrust and frustration in organizations. Organizational cynicism, which is frequently a manifestation of this pervasive phenomenon, has been shown to affect postlayoff attitudes and behaviors. It is generally assumed that postlayoff cynicism is predictive solely of dysfunctional outcomes. However, there is evidence suggesting that favorable consequences may emerge in some settings. In this exploratory study, the authors examined the postlayoff reactions of managerial employees who survived a corporate downsizing 1 month prior to the onset of the data collection. More specifically, they investigated the interactive effects of organizational cynicism and job insecurity on survivors' inclination to expend work effort. They hypothesized that cynics would report higher levels of work effort when faced with perceived job insecurity than noncynics. Results provided support for these hypotheses, as work effort increased concurrently with cynicism for those perceiving an insecure work environment. Implication of these results for science and practice, strengths and limitations, and an agenda for future research are provided.

Keywords: layoffs; cynicism; job insecurity; work effort

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Downsizing in U.S. organizations has accounted for thousands of lost jobs and major reconfigurations of structure and design--all intended to increase competitiveness and ensure long-term survival (McKinley, Zhao, & Rust, 2000; Sronce & McKinley, 2006). Employees have been stunned by the widespread layoffs of the 1990s and 2000s that redefined the nature of work contracts (Baumol, Blinder, & Wolff, 2003). In April 2007 alone, 1,243 mass-layoff actions were taken involving a total of 126,047 workers (Bureau of Labor Statistics, 2007). Because this statistic takes into consideration only actions involving the reduction of at least 50 employees from a single establishment, the total number of employees affected is considerably higher. Furthermore, layoffs in the United States have moved up the organizational hierarchy, claiming middle managers and professional employees. Previously, these groups were thought to be reasonably safe from downsizings (Cappelli et al., 1997). Workforce modifications, which are both extensive and frequent, have become engrained in the consciousness of virtually every organization. For example, Lohr (1996) reported that 70% of surveyed employees indicated that downsizing would be an incessant part of their work lives.

Considerable research has examined the effects of layoffs on the victims of downsizing (Pugh, Skarlicki, & Passell, 2003; Rust, McKinley, & Edwards, 2005; Sronce & McKinley, 2006). A related stream of research has been undertaken to understand the psychological, attitudinal, and behavioral effects of layoff on survivors (Brockner et al., 2004; Cascio, 1993; Leana & Feldman, 1992; Mishra & Spreitzer, 1998). In this exploratory investigation, we attempt to build on prior research by examining the interactive effects of cynicism (Mossholder, Settoon, Armenakis, & Harris, 2000) and perceptions of job insecurity (Ito & Brotheridge, 2007) on postlayoff work effort (Brockner, Grover, Reed, & DeWitt, 1992) for survivors of a corporate downsizing. Cynicism and job insecurity, as reactions to corporate restructuring, have been examined in prior research. Despite their importance as predictors of postlayoff coping and well-being (Greenglass & Burke, 2001) and the potential for these responses to affect each other (Burke, 2001), research has typically examined these reactions in isolation (see Brockner, Grover, et al., 1992, for an exception).

This research examines one fundamental question: Do increases in perceived job insecurity in a postlayoff environment affect work effort behaviors for cynical employees in a pattern similar to those less cynical? The article unfolds as follows. First, we briefly review the layoff, cynicism, job insecurity, and work effort literatures, noting common themes across research streams. Following this, we describe the theoretical underpinnings of the Cynicism x Perceived Insecurity interactive relationship on work effort.

Our objectives in designing this study were to address knowledge gaps that exist in academic research and to offer insight to those faced with managing survivors in postlayoff settings. In terms of scholarship, there remains much to be learned by considering the effects of perceived insecurity in postlayoff settings. For example, prior research suggests that the effects of job insecurity on work outcomes are invariant across situations and time (Brockner, Grover, et al., 1992; Chirumbolo & Hellgren, 2003). To reconcile these inconsistent results, it is necessary to examine possible intervening factors that may help predict when insecurity promotes beneficial outcomes and when its effects are detrimental to individual and organizational functioning. We contend that cynicism represents one such factor. However, despite the fact that ample research has examined the role of trust in layoff settings (Grunberg, Anderson-Connolly, & Greenberg, 2000; Ito & Brotheridge, 2007; Mishra & Spreitzer, 1998), cynicism's neutralizing or facilitating effect on job insecurity has yet to be considered.

In practice, we still know little about the reactions of those who remain relative to layoff victims (Devine, Reay, Stainton, & Collins-Nakai, 2003; Paulsen et al., 2005). Researchers advocate including contribution and ease of replacement as criteria for choosing downsizing victims (Cascio & Wynn, 2004; Dolan, Belout, & Balkin, 2000), and if these tactics are utilized, it is expected that performance would be at least comparable to prelayoff levels. However, research examining survivor performance has typically been mixed (Brockner et al., 2004; Reynolds, 1993). A greater awareness of survivor responses presumably will promote the development of programs aimed at increasing productivity, profitability, and employee well-being. If these programs are conducted effectively, future layoffs may become (largely) unnecessary (Rust, McKinley, Moon, & Edwards, 2005).

Literature Review

Workforce Restructuring

Layoffs have become an endemic component of virtually all work contexts. Survivor reactions, which range from anger to relief (Mishra & Spreitzer, 1998; Robbins, 1999), are often associated with the observed layoff process (McKinley, Mone, & Barker, 1998; Edwards, Rust, McKinley, & Moon, 2003; Rust et al., 2005), most notably in the form of perceived fairness (Brockner, Tyler, & Cooper-Schneider, 1992; Brockner, Wiesenfeld, Reed, Grover, & Martin, 1993). For example, research has shown postlayoff fairness perceptions to be favorably associated with outcomes such as commitment, trust, satisfaction, and turnover intent (Brockner et al., 1997; Davy, Kinicki, & Scheck, 1997; Kernan & Hanges, 2002). Conversely, when downsizing activities are viewed as unjust or management falls to keep employees informed throughout the process, the integrity of the company is questioned (Paterson & Cary, 2002). These contexts serve as breeding grounds for distrust that often continues well beyond the time of the restructuring (Mishra & Spreitzer, 1998).

In contrast to the counsel of Brockner, Dewitt, Grover, and Reed (1990) and Wanberg, Bunce, and Gavin (1999), who suggested that managers display caring attitudes and provide explanations for layoffs, some restructurings have been done in ways that violate common decency (Folger & Skarlicki, 1998). In addition to incivility connected with the downsizing, employees are increasingly angered by how both organizations and senior executives are "rewarded" by layoffs. Kashefi and McKee (2002) found that layoff announcements were met with abnormally positive returns. Furthermore, firms that combined downsizing with asset restructuring often demonstrate better stock outcomes and increased return on investment (Cascio, Young, & Morris, 1997) than those that do not. Finally, it was reported that executives at General Dynamics garnered bonuses equivalent to twice their yearly salary following an announced workforce reduction of more than 12,000 workers (Robbins, 1999). According to Mirvis (1991), "It has now reached the point where cynicism is chic and loyalty to the company is for saps and suckers" (p. 2).

Increasing numbers of restructurings, coupled with a lack of consideration and excessive executive compensation following the layoff, have made organizations ideal settings for studying postlayoff cynicism (Hochwarter, James, Johnson, & Ferris, 2004). In fact, some scholars have gone so far as to suggest that management actions of the past 15 years have created a "legacy of cynicism and resistance following changes which have been driven or forced as inevitable or fashionable, and which have increased working pressures and stress without clear benefits" (Buchanan, Claydon, & Doyle, 1999, p. 20). Moreover, it appears that the legacy of layoffs will trickle down to the newest entrants into the workforce. Barling, Dupre, and Hepburn (1998) reported that parental job insecurity perceptions affected children's subsequent work beliefs, including the level of alienation and cynicism brought to the job. In short, the new generation of workers fosters cynical attitudes toward their employer even prior to starting their careers.

Employee Cynicism Following a Layoff