How mass layoffs are related to lower job performance and OCB among surviving employees in Chile: an investigation of the essential role of psychological contract

Abstract

This study aimed to investigate how mass layoffs impact surviving employees in organizations. More specifically, this study ascertained the relationships between mass layoffs and employee work behaviors. It was theorized that mass layoffs will be negatively related to employee performance and OCB through its relationships with job insecurity and psychological contract breach. Moreover, it was expected that perceived manager support would buffer against the negative relations of contract breach with employee performance and OCB. A study among 615 employees in multiple Chilean organizations showed support for the hypotheses: job insecurity and psychological contract breach mediated the relationships between mass layoffs and employee performance and OCB. We also found moderating relationships of manager support, but the relations of breach with performance and OCB were particularly negative when manager support was high, indicating feelings of betrayal among high support employees in response to contract breach. Moreover, the relation of contract breach with performance was positive for low-support employees, and non-significant for high-support employees. Our study advances understanding of the processes underlying how mass layoffs influence employee behavior in the workplace, through introducing the psychological contract as a way of understanding the relationships

Balancing tensions: Buffering the impact of organisational restructuring and downsizing on employee well‐being

“…According to the logic of JD‐R, job resources can act as buffers against strain, exhibiting a particularly salient impact in the context of more intense demands (Bakker et al, ; Hakanen et al, ). Research has found such resources to include trust, employee justice, and general managerial support (Kalimo et al, ; López‐Bohle et al, ). Absent, however, has been a systematic framework that simultaneously allows for the incorporation and interaction between both resources and demands.…”

“…Restructuring and downsizing are increasingly common practices amongst organisations, serving as a highly visible manifestation of organisational change (Cascio, ; Trevor & Nyberg, ). In the context of reorientations brought about by economic decline and financial crisis, restructuring and downsizing are critical levers to cut costs and sustain viability (Cameron, ; Halbesleben, Wheeler, & Paustian‐Underdahl, ; López‐Bohle, Bal, Jansen, Leiva, & Alonso, ). Despite this prominence, the organisational benefits of restructuring and downsizing remain contested and variable (Datta, Guthrie, Basuil, & Pandey, ; de Jong et al, ).…”

“…Although recent research has advanced our understanding of the impact of lay‐offs and restructuring during recession, it has focused more on macro institutional factors (Goyer, Clark, & Bhankaraully, ) or challenges for managers and HR professionals (Iverson & Zatzick, ; Teague & Roche, ). When employees are incorporated, this is often via narrow concepts such as psychological contract breach and managerial support (López‐Bohle et al, ), without a holistic lens of inquiry to illuminate key relationships. Moreover, research tends to rely on secondary company data (Goyer et al, ; Norman, Butler, & Ranft, ) or explore particular contexts (e.g., Kawai, ; López‐Bohle et al, ; Parker, Chmiel, & Wall, ).…”

“…When employees are incorporated, this is often via narrow concepts such as psychological contract breach and managerial support (López‐Bohle et al, ), without a holistic lens of inquiry to illuminate key relationships. Moreover, research tends to rely on secondary company data (Goyer et al, ; Norman, Butler, & Ranft, ) or explore particular contexts (e.g., Kawai, ; López‐Bohle et al, ; Parker, Chmiel, & Wall, ). The current paper provides a broader, systematic understanding by drawing on a nationally representative survey examining employees' workplace experiences in the Republic of Ireland during 2009.…”

“…In contrast to restructuring and downsizing in the service of continuous improvement or strategic empowerment (e.g., Parker et al, ), reorientation induced by exogenous shocks such as recession is said to result in substantial and accelerated organisational interventions with particularly severe employee consequences (Cameron, ; Kozlowski, Chao, Smith, & Hedlund, ). Exemplar is the recent global financial crisis that induced significant organisational restructuring and downsizing (Iverson & Zatzick, ; López‐Bohle et al, ; Van Dierendonck & Jacobs, ), resulting in 20 million job losses across the globe (Kawai, ). Eurofound () reported a significant 25% differential in negative employment outcomes in those countries most impacted by the recession.…”