Job Insecurity: It’s Not Just the Economy, Stupid

The economic instability that has swept the globe over the last six years has largely snuffed people’s confidence in their job security. And that wariness does nothing to improve organizations’ financial success. A 2008 study showed that job insecurity erodes commitment and performance, not to mention health. The pessimism in the workforce could therefore create a vicious cycle of lackluster economic growth; as workers worry about getting pink slips, their productivity declines and profits drop. And as profits drop, workers fret even more about their jobs.

Psychological scientists in Europe recently investigated this possibility, striving to find out the exact reasons people feel insecure about their jobs.  Specifically, they wanted to measure how individuals’ personalities, their company’s financial health, or some combination of the two, influence their perceptions about their job stability.

Led by Maike E. Debus of Universität Zürich, the researchers surveyed 640 employees (anonymously) working at 50 small- to medium-sized companies in Switzerland. Even though Switzerland’s jobless rate is low—about half of the 6.3% rate in the United States— surveys show unemployment to be the biggest concern among Swiss people. The respondents came from diverse educational backgrounds and occupational positions, and a small percentage of them were on temporary contracts.

The participants were asked to rate the likelihood of losing their jobs. Additional questions were designed to measure the participant’s general emotional state and their locus of control—the amount of power they feel they have over events that affect them.

Debus and her colleagues also obtained an objective assessment of each company’s financial status by researching independent credit risk scores.

The results showed that personality and locus of control weighed more heavily on people’s job insecurity than did company performance. Moreover, employees on temporary contracts were more worried about their jobs the more they expressed negative attitudes and the less they felt control over events in their lives.

Debus and her collaborators don’t minimize the impact that economic conditions and company performance have on people’s fears about job loss.  But they say their study demonstrates the importance of looking at the ways personality and situational factors interact to influence individuals’ perceptions of their job security.

The scientists recommend additional research on contextual factors, such as national GDP and unemployment rates that vary from country to country. But they add that companies should consider that employees’ concerns about job security are not primarily affected by the organization’s performance.

“[I]f managers have to convey certain negative messages,” they write in Journal of Occupational and Organizational Psychology, “they should verbalize them with an unambiguous interpretation, whereby employees have as little wiggle room as possible to fill with their own cognitions.”

Debus, M.E., König, C.J., Kleinmann, M. (2014). The building blocks of job insecurity: The impact of environmental and person-related variables on job insecurity perceptions. Journal of Occupational and Organizational Psychology, 87, 329-351. DOI:10.1111/joop.12049