Impact of Job Insecurity on Employee Performance and Commitment - Literature review Example

IMPACT OF JOB INSECURITY ON EMPLOYEE PERFORMANCE AND COMMITMENT: LITERATURE REVIEW Name: Course: College: Tutor: Date: Literature Review This section reviews what past literatures have had to say about job insecurity generally and its impacts on the performance and commitment of employees. There are various definitions of job insecurity. Lee et al. (2008 define job insecurity as the reality or an employee’s perceived threat of layoff or job termination. Lim and Teo (2000) defined it as the amount of an employee’s uncertainty about his/her job continuity and/or the continuity of certain aspects of their jobs. This last definition might be referring to issues such as: paid annual leaves and/or holidays; maternity at work; health and safety at the workplace; employment injury and/or sickness benefits; and social security, among others. In more-or-less the same respect, Ito & Brotheridge (2007) argue that job insecurity refers to a range of concerns beyond just the potential loss of employment, which include uncertainty regarding job, as well as career issues (such as an employee’s promotional opportunities and level of workplace responsibility (Hellgren & Sverke 2003) Regardless, job insecurity is certainly a chronic problem that is affecting the general workforce today. This has been attributed to a number of factors. Rothmann and Joubert (2007) believe part of it has to do with “globalization and continuous international pressure on organizations to perform better with fewer resources” (p.53), which is reflected in the changes in psychological contracts between employers and their employees. Particularly, employers expect their employees to give more in terms of skills, effort, time and flexibility even as opportunities for career and lifetime employment are increasingly diminishing. This relative lack of reciprocity (that is, the violation of the psychological contract by the employer) is likely lead to burnout in the employee, a crucial factor in maintaining well-being (Maslach et al. (2001). Taking the same line of argument, Probst (2004) observes that organizations have had to restructure (in terms of finances, business, processes and structure) in response to deregulations, extreme competitive pressures and rising costs. In this respect, the recent years have seen increased focus to phenomena like reorganization, downsizing and merging, among others. The two believe that these changes have prompted changes at the workplace, changes that have caused increased job insecurities (real or perceived) for many employees. But job security, note Yahaya et al. (2010), is a very important factor for the employer, particularly in relation to its influence on work-related outcomes. High job security level means there is a small chance of one becoming unemployed. Moreover, Borg and Elizur (1992, cited in Yahaya et al. 2010), argued that job security is one of the key factors that influence employee job commitment and performance. These arguments have led to studies aiming to find the association between job insecurity and the psychological reactions that impact on commitment to and performance at work: low self-esteem and self-confidence, which ultimately leads to low performance. Often, in this respect, researchers largely weigh the impacts of job security against job insecurity. Mikkelsen et al. (2000) noted that job security has the same effect for nurses as it does for other employees: anxiety, burnout, poor sleep, stress, depression and poor health, among others. However, perceptions and feelings of job insecurity are the not the same for all individuals; they vary from one employee to another. Besides, studies on stress have found this problem to depend more on how one copes with the situations they face and not the lack of stressful situations per se. In this respect, Probst (2004) underlines the importance of internal resources (including hardiness, coping strategies and dispositional optimism), as well as external resources (such as social support and material resources). There have been a number of researches on the intervening variables that can help reduce and/or mitigate the negative consequences of job insecurity (Sverke & Hellgren 2002). These studies have suggested that differences in personality traits from one individual to another (in terms of self care and negative affect, self-esteem and optimism, emotional intelligence, need for security and locus of control) “may moderate the negative effects of job insecurity on well being outcomes” (Sverke & Hellgren 2002, p.29). External resources (including social support, process and work control perceptions, participation in the processes of decision-making, and organization justice and fairness of treatment), on the other hand, have been shown to affect employees’ work attitudes (that is, satisfaction and commitment) and ultimately well being, which can moderate the impacts of job insecurity on the employee (Hellgren & Sverke 2003). However, Sverke et al. (2004) made a theoretical distinction between different intensities of the effects of job insecurity: short- and long-term reactions to job insecurity. They argued that some forms of reactions (such as work attitudes) “would arise closer in time to the stress experience with respect to some others that are expected to emerge after a longer period of time, such as behaviors and health complaints” (Sverke et al. 2004, p.11). Ample empirical evidence show that job insecurity has more and stronger short-term outcomes (including organizational commitment and job satisfaction) than it has long-term effects that are manifested in the organization (including performance, absenteeism, withdrawal behaviors [such as turnover intention] and lateness, among others). Generally, the impacts of job insecurity can be viewed from two main perspectives: the individual consequences and organizational consequences. From individual consequences point of view, a number of studies have found a correlation between higher feelings of job insecurity and poorer physical and mental health (including psychological distress anxiety and burnout) among employees (Chirumbolo & Helgren 2003; Hellgren & Sverke 2003). From the organizational impacts perspective, higher feeling of job insecurity among employees have been associated with lower employee job satisfaction and organizational commitment, the intentions to quit and reduced organizational trust (Chirumbolo & Hellgren, 2003), and “proactive job search and noncompliant job behaviors, workplace withdrawal behaviors such as absenteeism, tardiness and task avoidance, lower job performance and impaired safety outcomes such as higher level of workplace injuries and accidents” (Probst 2004, p.5). Consequences of Job Insecurity for the Individual Based on Jahoda’s (1982, cited in De Cuyper et al. 2008) model of latent deprivation, employment constitutes one of the most important elements of social recognition and participation. In other words, employment provides people with the means to earn income, but also for personal growth and development, including creating social network. In this respect, “employees develop deep-seated needs for structuring their time and perspective, for enlarging their social horizon/network, for participating in collective enterprises, where they can feel useful for knowing they are recognized in society for being active contributors” (Jahoda’s 1982, cited in De Cuyper et al. 2008, p.496). Based on these views, thus, employees’ perception of losing the job or certain attributes of it can have significant impact on employees’ overall situation of life when they perceive their economic status, among other valuable aspects of life threatened (De Cuyper et al. 2008). Moreover, Buitendach and De Witte (2005) argues that whenever perceive their needs to be under threat because of job insecurity, they in turn perceive that economic, social and personal growth and development to be under threat as well. When an individual is served with possible retrenchment notification, he/she is confronted with stress and may struggle to cope with the uncertainties associated with their job security within the organization (De Witte 2005a). As a consequence of this, De Witte (2005a) notes that employees who feel uncertain and insecure after receiving information of a likely retrenchment lack adequate preparedness for the future as they have no clarity regarding what actions to take and which ones not to. Moreover, employees may have feelings of job insecurity when they are reassigned to lower positions or transferred to another position that offers no or less opportunities for promotion. According to Roskie and Louis-Guerin (1990, cited in Buitendach & De Witte 2008), prospects of demotion, deterioration in conditions of work and long-term potential of eventual loss of job is associated with reduced well being and commitment to the organization and work. Job insecurity leads to the possibility of an employee looking for another job elsewhere. But perceived feelings of job insecurity are not only a matter of internal organizational context. Rather, these feelings also grow out of the general economic climate in the broader environment (country and industry, among others). It is therefore possible that employees respond differently to negative aspects like job insecurity depending on employability (De Cuyper et al. 2008). The term ‘employability’ as used here concerns the viability in the wider (national or industry-specific) labor which includes an individual’s perceptions of the possibilities of getting a new job is they quit the one they currently have Bersnston et al. 2006). In other words, this is the subjective phenomenon that regards an individual’s perception of the possibilities of getting another job. As it were, employable individuals will perceive themselves as having opportunities in the wider labor market, and will therefore easily detach themselves from an organization faster than their colleagues who do not feel so confident about their employability. Adopting Bernston et al.’s (2006) definition of employability, De Cuyper et al (2008) assert that employability can promote an employee’s feelings of being in control of their career and ultimately well being. In this respect, De Cuyper et al. (2008) hold that employability therefore reduces “fears of becoming unemployed, that the likely favorable results imply that employability provides employees with alternatives and choices that ensure they are less vulnerable in threatening situations” (p.498). Consequences to the Organization In this respect, De Witte (2005a) observes that the perceptions of employees in relation to job security or insecurity may influence various organizational behaviors and attitudes that may have far-reaching positive or negative effects for the organization. Greenhalgh and Rosenblatt (1984, cited in Chirumbolo & Hellgren 2003) argued that behavioral and attitudinal effects associated with perceptions of job insecurity can have profound influence on the survival of organizations in relation to impaired productivity, barriers to adaption and increased turnover. The most popular consequences of job insecurity on the organization are job satisfaction, organizational commitment, distrust in management, higher burnout levels, intentions to quit and decreased performance. Buitendach and De Witte (2005) believe that feelings of job insecurity threaten the basic elements of attachment to the organization (trust, satisfaction and commitment) which they believe employees develop over time. Job satisfaction is “the emotional state resulting from the evaluation or appraisal of one’s job experience” (Ashford et al. 1989, p.808). In other words, employees respond to jobs affectively when they cognitively perceive or represent their situations. The premise is that those who feel insecure regarding their future employment prospects are generally dissatisfied with their jobs and are therefore more likely to quit than their colleagues who perceive their future job prospects as more secure. Confirming this view, Sverke et al. (2002) have demonstrated a consistent negative relationship between job satisfaction and job insecurity. There are various definitions of organizational commitment. Earlier studies, for instance, defined organizational commitment as a one-dimensional construct based on the emotional attachment of employees to the organization- this is an attitudinal perspective. Others have defined it based on the costs associated with an employee leaving the organization (a behavioral perspective). More recent definitions have combined both attitudinal and bahvioural perspectives, so that organizational commitment is seen in terms of an employee’s attitudes towards work and the organization and (as manifested in) their work (productivity) contribution to the organization (Zangaro 2001; Watsi 2005). Trust in management is also a very vital determinant of job satisfaction. Low trust results from when an employee does not believe communication from the management regarding the reasons for job insecurity within the organization. In turn, this can affect how an employee interprets the external environment, the actions inside the organization and these affect their (employees’) actions in relation to job insecurity (Zangaro 2001). These effects of job insecurity influence individual well being negatively. In relation to job insecurity, these negative effects on the well being of employees are related to event uncertainty regarding job continuity or job loss (Mauno et al. 2007). According to Mauno et al. (2007), the negative effects of job insecurity on employee well being are in fact more evident in poor job attitudes (including reduced commitment to the organization) than even poor well being and mental health (such as burnout and distress). As a threat that implies uncertainty, job insecurity has been described as a job stressor- often associated with powerlessness (Naswell et al. 2005). Therefore, employee perceptions about job insecurity can cause the organization to suffer financially as a result of the associated costs of lowered employee well being and absenteeism, among others. Other impacts of perceived job insecurity on the organization include turnover of employees, lower level of employee commitment to the organization, reduced employee engagement, loyalty and satisfaction, trust in employers and ultimately reduced worker productivity (De Cuyper et al. 2008). All these outcomes relate to the four major categories of all likely effects of job insecurity as outlined by Sverke et al. (2002). Conducting a study on the mediation between contract type and job insecurity outcomes, De Cuyper and De Witte (2005) note that job insecurity outcomes are not significant to general health, positive work-home interference and performance as they are for engagement, trust, irritation, satisfaction, organizational commitment and turnover intention. 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