Managing furloughs: how furlough policy and perceptions of fairness impact turnover intentions over time

Abstract

Given the increasing application of cutback strategies in the workplace, and an underlying need to understand explanatory process at work, we investigated the effects of one cutback strategy to deal with economic uncertainty-furloughs. Equity theory and social exchange theory guided our predictions in explaining the mechanisms through which furloughs affect turnover intentions. Quantitative data collected at two time periods during the "Great Recession", after cutbacks were announced and implemented, provided evidence that assessments of psychological contract breach and work overload affect the relationship between furlough experience and turnover intentions. To investigate how the additional stressors of a pandemic affected the proposed model, a follow-up content analysis of employee discussions around cutback policies during the COVID-19 pandemic was conducted. This analysis provided support for the model, and also identifies several additional themes brought on by the pandemic (trust, and health and safety), with many employees exhibiting feelings of anxiety and fear around cutback policies and the status of their employment in general. Our results have implications for many organizational cutback initiatives, including salary reductions and decreased organizational resources, that are implemented during times of crisis. Organizations struggle to sustain productivity during an economic downturn, when uncertainty surrounds short-and near-term demand. In 2008, this was pronounced during the great recession, and again in 2020 this became relevant for business leaders dealing with the closure or slowdown of their businesses due to the COVID-19 crisis. As payroll expense is often the largest item on

The Psychological Effects of Digital Companies’ Employees during the Phase of COVID-19 Pandemic Extracted from Online Employee Reviews

“…The traits and behaviors of organization leaders that are deemed helpful by employees [41,42]. The research incorporated the conservation of resource theory to examine how high-performance work practices affect the employee's in-role performance and employee's task performance during the pandemic [43,44]. The psychological contract could also breach on employees' innovative behavior and well-being who are working from home [11].…”

Turnaround and human resource strategies during the COVID-19 crisis

“…There has been a rising interest in HRM in times of crisis, justified by multiple critical periods (e.g., financial crises, health crises, technological irruptions, etc.) ( Cascio, 2002 ; Chu & Siu, 2001 ; Hitt et al, 1994 ; Huffman et al, 2022 ; Luan et al, 2013 ; Santana et al., 2017 , 2019b ; Tsai & Yen, 2008 ). The academic literature on the effects of crises on HRM, however, needs to be further developed ( Kwong et al, 2021 ; Santana et al, 2017 ).…”

“…In this line, Carnevale and Hatak (2020) highlighted that organizations face a huge challenge regarding employee adjustment and well-being: companies need to support their workforce to adjust to new working conditions, such as shifting to remote working, new HR planning, and less physical human interaction. Moreover, one of the most recurrent HR responses in times of crisis is the cutback decision ( Huffman et al, 2022 ; Santana et al, 2017 ). In this sense, Huffman et al (2022) focused on furlough decisions, such as unpaid leave over certain periods, for example, days or weeks, or temporary reductions in working hours.…”

“…Moreover, one of the most recurrent HR responses in times of crisis is the cutback decision ( Huffman et al, 2022 ; Santana et al, 2017 ). In this sense, Huffman et al (2022) focused on furlough decisions, such as unpaid leave over certain periods, for example, days or weeks, or temporary reductions in working hours. Huffman et al (2022) found that controlling (reducing) furlough durations and implementing and communicating fair and transparent furlough policies could strengthen overall HR management in times of uncertainty.…”

“…In this sense, Huffman et al (2022) focused on furlough decisions, such as unpaid leave over certain periods, for example, days or weeks, or temporary reductions in working hours. Huffman et al (2022) found that controlling (reducing) furlough durations and implementing and communicating fair and transparent furlough policies could strengthen overall HR management in times of uncertainty. Despite the interest in crisis HRM, further research is needed due to the complexity of the situation for managers and the workforce.…”