The Perceived Fairness of Layoff Practices1

Policy capturing was used to identify layoff practices having the greatest impact on the perceived fairness of layoffs. Full‐time employees (N = 23) rated the fairness of 100 hypothetical layoffs incorporating each of 12 layoff practices reflecting different approaches to organizational justice. Managerial consistency in implementing layoffs, an unbiased layoff policy, and the size of severance packages had the strongest influence on fairness judgments. These results suggest that practices reflecting structural aspects of justice play the greatest role in layoff fairness perceptions, whereas practices consistent with social aspects of justice may be relatively less important.     

HEARING IT THROUGH THE GRAPEVINE: THE INFLUENCE OF SOURCE, LEADER-RELATIONS, AND LEGITIMACY ON SURVIVORS' FAIRNESS PERCEPTIONS

This study developed and tested a model of survivors' fairness perceptions. Data on leader-member relations and affective commitment was collected from 217 R&D professionals approximately 15 months prior to a major layoff. A second wave of data assessed source of layoff announcement, legitimacy of the organizational account, and procedural and distributive fairness 1 month after the layoff occurred. Results of path analysis confirmed hypothesized relationships, and the variance accounted for in distributive and procedural fairness was 24% and 48%, respectively. Procedural fairness was higher for survivors who were informed of impending layoffs by their managers. However, this effect was stronger for high than for low leader-member exchange (LMX) employees. Legitimacy of the account was positively related to procedural fairness. Distributive fairness was indirectly related to the independent variables through procedural fairness. Affective commitment of 78 of the original respondents was assessed approximately 24 months after the layoff. Post-layoff affective commitment was significantly related to procedural but not to distributive fairness perceptions. The findings underscore the critical role of direct supervisors in layoff announcements as well as providing evidence of the long-term effects of procedural fairness on survivor commitment.     

THE INFLUENCE OF LAYOFF SEVERITY ON POSTLAYOFF UNION COMMITMENT AMONG SURVIVORS: THE MODERATING EFFECT OF THE PERCEIVED LEGITIMACY OF A LAYOFF ACCOUNT

This study used a moderated cross-level design to predict union commitment among 355 union survivors after layoffs. Survivors experiencing varying degrees of layoffs at 15 job sites judged the legitimacy of the company's layoff explanation. In each case, the account implicated the union as the agent responsible for the layoff decision. Company records were used to aggregate layoff severity within job site. Survey measures were used to assess retrospective belief in the account and commitment to the union after the layoff event. Based on interactional justice theory, a significant interaction was predicted between layoff severity and belief in the account as related to postlayoff union commitment. Survivors with higher levels of belief in the account were expected to be less committed to the union than those with moderate or lower levels of belief under more severe layoffs. Moderated regression analyses of overall commitment supported the expected interaction. Regression analyses of commitment components revealed that only willingness to work for the union was affected by the interaction. Additional analyses, in which the willingness to work component was regressed onto layoff severity within high to low belief subgroups, were also consistent with the prediction. Theoretical and practical implications of the findings for company and union officials in managing union survivors are discussed.     

PERCEIVED FAIRNESS OF LAYOFFS AMONG INDIVIDUALS WHO HAVE BEEN LAID OFF: A LONGITUDINAL STUDY

This longitudinal study examined 3 layoff-specific (explanation, correctability, and severance benefits) and 2 person-centered (negative affectivity and prior organizational commitment) variables as predictors of layoff victims' judgments of layoff fairness, willingness to endorse the terminating organization, desire to take the previous employer to court, and willingness to commit to future employers. In addition, this study assessed how reemployment moderated these relationships. The results highlighted the importance of receiving an explanation from organizations about how and why layoffs were conducted. Explanation was associated with higher perceived fairness of the layoff, higher willingness to endorse the terminating organization, and less desire to sue that organization, even after reemployment. Four predictor-outcome relationships were moderated by reemployment status.     

The influence of diversity context on white men's and racial minorities' reactions to disproportionate group harm

The author examined the influence of organizational diversity management on White men's and racial minorities' perceptions of fairness when members of their identity group were disproportionately harmed in a layoff. Using a scenario design, the author studied the reactions of 284 White male and racial minority layoff survivors under 2 different diversity contexts. White men saw the layoff as less fair to their group when other White men were laid off disproportionately in an active-diversity context versus an inactive-diversity context. Racial minorities' perceptions of fairness when other minorities were laid off disproportionately were not influenced by the diversity context, but they perceived the layoff as more fair to their group in an active-diversity context when White men were laid off disproportionately. The findings suggest that during layoffs or other significant organizational changes where job insecurity is heightened, different identity groups might perceive diversity management differently.     

Layoffs,self-esteem,and survivor guilt: Motivational,affective, and attitudinal consequences

The present study explored the effect of layoffs on the subsequent productivity of “survivors”. All participants performed a proofreading task either after witnessing the dismissal of a co-worker (Layoff condition) or not (No-Layoff condition). Consistent with equity theory, the quantity of workers' performance was greater in the Layoff than in the No-Layoff condition. A Worker Self-Esteem × Layoff interaction effect revealed that the Layoff effect was entirely attributable to the low, rather than the medium or high, self-esteem participants. Additional analyses revealed that the layoff caused participants to (1) experience increased feelings of remorse and (2) develop more negative attitudes toward their co-worker, both of which are also consistent with equity theory. Practical and theoretical implications are discussed.     

Decision Frame,Procedural Justice,and Survivors′ Reactions to Job Layoffs

Behavioral decision theory suggests that the perceived favorability of outcomes depends on how they are framed. Recent research in the justice literature suggests that perceived outcome favorability and procedural fairness interactively combine to influence employees′ reactions to a resource allocation decision. The present study tested a hypothesis derived from the integration of these two literatures: that decision frame-by affecting perceived outcome favorability-would interact with procedural fairness to influence individuals′ reactions to the decision. All participants were layoff survivors; the primary dependent variable was their trust in and support for the organization subsequent to the layoff. Through a framing manipulation, half evaluated the criteria that the organization used to keep certain employees rather than others (Keep condition), whereas the other half judged the criteria that the organization used to dismiss certain employees rather than others (Dismiss condition). Survivors also evaluated the procedural fairness of the layoff. As predicted, decision frame and procedural fairness interacted to influence survivors′ trust in and support for the organization. When procedural fairness was low, survivors reacted more favorably in the positive frame (Keep) than in the negative frame (Dismiss) condition. When procedural fairness was high, however, decision frame had no effect on survivors′ reactions. Possible explanations of the findings, as well as their theoretical and practical implications, are discussed.     

The Influence of Diversity Context on White Men's and Racial Minorities' Reactions to Disproportionate Group Harm

Abstract

The author examined the influence of organizational diversity management on White men's and racial minorities' perceptions of fairness when members of their identity group were disproportionately harmed in a layoff. Using a scenario design, the author studied the reactions of 284 White male and racial minority layoff survivors under 2 different diversity contexts. White men saw the layoff as less fair to their group when other White men were laid off disproportionately in an active-diversity context versus an inactive-diversity context. Racial minorities' perceptions of fairness when other minorities were laid off disproportionately were not influenced by the diversity context, but they perceived the layoff as more fair to their group in an active-diversity context when White men were laid off disproportionately. The findings suggest that during layoffs or other significant organizational changes where job insecurity is heightened, different identity groups might perceive diversity management differently.     

La résilience dans les situations de licenciement économique : une étude de cas mobilisant les dialogues de conseil en life design

Professional breakdowns are numerous in today's world of work and can lead to psychological distress, precariousness and loss of self-esteem. Resilience gathers a set of psychological attitudes and processes that allow individuals to struggle in order to find life meaning and recover self-confidence after a traumatic event. This article proposes in a first part, a review of the literature on the concept of resilience in connection with career breakdowns and more particularly with layoffs. The second part is a case study that aims to highlight the role and interest of Life Design Counseling Dialogues (LDCDs) (Guichard, 2004) as a career counseling method supporting the implementation of psychological processes that contribute to resilience after a layoff. As part of a career counseling intervention, LDCDs were implemented in a case study. They were transcribed and analyzed using the methodology of innovative moments (Gonçalves et al., 2009). The analysis reveals an increase in the number of innovative moments showing a change in the person's life and it confirms the emergence of resilience processes during DCLDs. These results are discussed in relation to models of resilience and with the role of counselors and psychologists who accompany individuals who have met a layoff.     

Procedural Fairness, Managers' Self-Esteem, and Managerial Behaviors Following a Layoff

The present research examined the predictors and consequences associated with managers' reactions to job layoffs. Whereas previous research suggests that procedural unfairness lowers self-esteem, we hypothesized that, in a downsizing context, the relationship between procedural unfairness and lower self-esteem would be more pronounced among managers than nonmanagers. The results of Study 1 supported the hypothesis and showed that the findings were attributable to managers' greater organizational commitment. Study 2 showed that managers who perceived procedures to be less fair were less likely to report practicing the behaviors needed from effective managers in times of change. Moreover, the relationship between procedural unfairness and managers' behaviors was mediated by their self-esteem. Subordinates of managers who engaged in less effective managerial behaviors, in turn, had more negative perceptions of their immediate work environments. Copyright 2000 Academic Press.     

Procedural justice and layoff survivors' commitment: a quantitative review

Layoffs are common in today's organizations. Most studies that have examined the correlation between procedural justice and the organizational commitment of layoff survivors have yielded positive correlations, but the magnitude of the correlations varies widely. This study is the first to estimate the population correlation and to identify the primary sources that cause variation in the correlation across studies. The results indicated that justice and commitment correlations can always be expected to be positive. Based on a total sample size of 9080 individuals, the estimated mean population correlation was .34. Variation was primarily explained by attributes of the justice measure where multiple items scales and scales composed of both interactional and procedural justice items yielded higher correlations than single item measures. Therefore, it is important that employers recognize the substantial assuaging affect that procedural and interactional justice can have on survivors' organizational commitment.     

Escalation in groups: Focus on information sampling

The purpose of this experiment was to examine if groups escalate more than individuals when information is not distributed to all group members. The experiment also attempted to replicate Bazerman, Beekun, and Schoorman's (1992) findings, that participants with high responsibility escalate more than participants with low responsibility. The task was a modified version of the Heeley Store Case (Bazerman et al., 1992). The dependent measures fell into three categories: rewards, appropriateness of layoff/demotion, and forecasted future performance. The results showed little support for the hypotheses. First, high responsibility participants escalated significantly more than low responsibility candidates for only one of the six measures. This may have been due to the fact that all participants felt responsible for their decisions. For the other dependent variables, the effect was either not significant or in the wrong direction. Second, no significant interaction was found between responsibility and decision-making context (individual, groups with all shared information, and groups with shared and unshared information). We then analyzed the data using a measure of felt responsibility as a covariate. The interaction between felt responsibility and decision-making context was significant only for layoff decision. For all of the other measures, no significant interaction was found. One possible reason why our hypotheses were not supported may have been that the groups felt a diffusion of responsibility. Larger groups may have also demonstrated the effects of group processes more effectively. No clear conclusions can be made regarding the influence of information sampling on escalation. An earlier version of this paper was presented at the 1998 meetings of the American Psychological Society.     

Escalation in groups: Focus on information sampling

The purpose of this experiment was to examine if groups escalate more than individuals when information is not distributed to all group members. The experiment also attempted to replicate Bazerman, Beekun, and Schoorman's (1992) findings, that participants with high responsibility escalate more than participants with low responsibility. The task was a modified version of the Heeley Store Case (Bazerman et al., 1992). The dependent measures fell into three categories: rewards, appropriateness of layoff/demotion, and forecasted future performance. The results showed little support for the hypotheses. First, high responsibility participants escalated significantly more than low responsibility candidates for only one of the six measures. This may have been due to the fact that all participants felt responsible for their decisions. For the other dependent variables, the effect was either not significant or in the wrong direction. Second, no significant interaction was found between responsibility and decision-making context (individual, groups with all shared information, and groups with shared and unshared information). We then analyzed the data using a measure of felt responsibility as a covariate. The interaction between felt responsibility and decision-making context was significant only for layoff decision. For all of the other measures, no significant interaction was found. One possible reason why our hypotheses were not supported may have been that the groups felt a diffusion of responsibility. Larger groups may have also demonstrated the effects of group processes more effectively. No clear conclusions can be made regarding the influence of information sampling on escalation. An earlier version of this paper was presented at the 1998 meetings of the American Psychological Society.     

Self-construal level and voice procedures: The individual self as psychological basis for procedural fairness effects

In the current article, we investigate the influence of self-construal level on procedural fairness effects, that is, the finding that fair versus unfair procedures influence people’s evaluations of their relation with decision-making authorities. In two experiments, we manipulated self-construal level by activating the individual self (“I”) or the social self (“We”), and we induced a control condition. Furthermore, we manipulated procedural fairness by granting versus denying participants an opportunity to voice their opinion in a decision-making process. Results consistently revealed stronger procedural fairness effects if the individual self is activated than if the social self is activated. It is concluded that sometimes the individual self, rather than the social self, constitutes the psychological basis for procedural fairness effects.     

Enhancing Procedural Justice in Local Government Budget and Tax Decision Making

Two studies examined criteria for procedural justice in the related contexts of local government budgeting (Study 1) and taxation (Study 2). Questionnaire data were gathered from 272 municipal police chiefs in Study 1 and 81 municipal property owners in Study 2, Regression analysis indicated that ethicality. accuracy, and bias suppression were signiticant ( p < 0.05) predictors of procedural justice in both studies. Other significant predictors of procedural justice in Study I were correctability and justification. However. the relationship between justification and procedural justice in Study I was negative. which is contrary to theory. The results suggest strategies that local government officials can use to enhance the perceived fairness of budget and tax decision-making procedures.     

When explanations for layoffs are not enough: Employer's integrity as a moderator of the relationship between informational justice and retaliation

Victims of downsizing often perceive their layoff as being unfair, which can lead to various forms of retaliation. Informational justice, defined as providing employees with adequate explanations in a timely manner, has been prescribed as a way to mitigate the retaliation tendencies associated with unfairness perceptions. Few studies, however, have examined contexts in which informational justice might be more vs. less effective in this regard. In the present research, we explored whether employees' perception of the employer's integrity moderates the relationship between informational justice and retaliation among layoff victims. Results from a field and laboratory study suggest that informational justice helps manage retaliation only when layoff victims perceived that their employer had high (vs. low) integrity prior to the layoff. In Study 2, we found that perceived sincerity mediated the impact of informational justice by integrity interaction on retaliation.     

Payoffs for layoffs? An examination of CEO relative pay and firm performance surrounding layoff announcements

In this study, we theorize that chief executive officers’ (CEOs’) peer pay comparisons influence their decisions to engage in layoffs, and we consider the conditions under which layoffs deliver “payoffs” in the form of increases in subsequent CEO relative pay. Our results indicate that CEOs receiving compensation below their peers are significantly more likely to announce layoffs in the subsequent year, relative to those receiving compensation above their peers. Further, we find that the relationship between layoffs and subsequent changes in CEO relative pay depends on postlayoff changes in firm performance, with CEOs in firms with the largest performance gains receiving the largest increases in relative pay. We also show that our results are robust to an alternative operationalization of CEO relative pay. We provide evidence that external social comparisons may have predictable consequences for both CEOs’ propensities to engage in particular strategic actions and future changes in CEOs’ relative pay.     

Effects of concurrent verbalization on a time-critical, dynamic decision-making task

The authors investigated the effects of concurrent verbalization on students' performance on a time-critical, dynamic decision-making task. After training on Fire Chief (a computer microworld that simulates fighting a forest fire; M. M. Omodei & A. J. Wearing, 1993a), 60 research participants were allocated randomly to 1 of 3 experimental conditions: silence, associative verbalization, or procedural verbalization. Participants who verbalized the bases of their decisions (procedural verbalization) performed significantly worse on average than participants in the silence condition. There was a small but non-significant decrement in the performance of participants who verbalized thoughts other than the bases of their decisions while performing the task (associative verbalization). Their average level was between the levels of participants in the silence and procedural-verbalization conditions.     

Effects of Concurrent Verbalization on a Time-Critical,Dynamic Decision-Making Task

The authors investigated the effects of concurrent verbalization on students' performance on a time-critical, dynamic decision-making task. After training on Fire Chief (a computer microworld that simulates fighting a forest fire; M. M. Omodei & A. J. Wearing, 1993a), 60 research participants were allocated randomly to 1 of 3 experimental conditions: silence, associative verbalization, or procedural verbalization. Participants who verbalized the bases of their decisions (procedural verbalization) performed significantly worse on average than participants in the silence condition. There was a small but nonsignificant decrement in the performance of participants who verbalized thoughts other than the bases of their decisions while performing the task (associative verbalization). Their average level was between the levels of participants in the silence and procedural-verbalization conditions.     

Risky business: Psychopathy,framing effects,and financial outcomes

Using a risky-choice framing paradigm, we investigated (a) the extent to which psychopathic features shape behavioral responses to potential losses vs. potential gains and (b) how these relations bear on real-world economic decision-making in a community sample (N =  475). Associations among psychopathic features, risk-seeking, sensitivity to framing, and financial practices were also examined. Disinhibition manifested positive relations with risk-seeking and maladaptive financial practices, whereas boldness manifested positive relations with risk-seeking and adaptive financial practices. Individuals high in disinhibition and/or meanness were significantly less likely to endorse risk seeking in negative frames. Results provisionally suggest boundary conditions for framing effects; in particular, certain psychopathic traits may render individuals modestly less susceptible to framing or bias them towards risk-taking in positive frames.