The relationship between layoff perception and survivors work effort

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business MAI THI XUAN AI THE RELATIONSHIP BETWEEN LAYOFF PERCEPTION AND SURVIVORS’ WORK EFFORT MASTER OF BUSINESS (Honours) Ho Chi Minh City - Y2014 University of Economics, HCMC INTERNATIONAL SCHOOL OF BUSINESS THE RELATIONSHIP BETWEEN LAYOFF PERCEPTION AND SURVIVORS’ WORK EFFORT By MAI THI XUAN AI Mbus 3.2 ID: 22120084 Supervisor DR. PHAM QUOC HUNG December, 2014 I Acknowledgements First, I would like to thank my supervisor Dr. Pham Quoc Hung who has given me great supervision and advice in this process. His feedback, guidance and knowledge in the subject were very valuable throughout the whole process of this research. I feel a deep sense of gratitude to all respondents who spent their valuable time to answer my questionnaire and supply me with their knowledge and experiences in job performance and job motivation. Especially, I am moved and fired by the support of my dear friends who deliver my questionnaires to others to help me collect convenient data. I am grateful to my classmates in MBUS 3; they shared many interesting ideas and knowledge and assisted many sources for my research. Last but not the least; I am extremely thankful to my family who has given me outstanding support and understanding throughout my studies. December 08, 2014. Mai Thi Xuan Ai II Table of Contents Acknowledgements I Table of Contents II List of Tables V List of Figures VI Abstract VII CHAPTER 1. INTRODUCTION 1 1.1 Research Background 1 1.2 Research Problem 3 1.4 Research Objectives 4 1.5 Research question 4 1.6 Research Contributions 4 1.7 Research structure 5 1.8 Summary 5 CHAPTER 2. LITERATURE REVIEW, HYPOTHESES AND RESEARCH MODEL 6 2.1 Introduction 6 2.2 Literature review 6 2.2.1 Perceived threat 6 2.2.2 Perceived control 8 2.2.3 Perceived fairness 10 2.2.4 Self-esteem 12 2.2.5 Economic need to work 14 2.3 Research Model 16 CHAPTER 3. RESEARCH DESIGN AND METHODOLOGY 17 3.1. Introduction 17 3.2 Research Process 17 3.3 Construct Measurement 18 III 3.3.1. Measurement of Perceived threat 18 3.3.2. Measurement of Perceived control 19 3.3.3. Measurement of Perceived Fairness 20 3.3.4. Measurement of Self-esteem 20 3.3.5. Measurement of Economic Need to Work 21 3.3.6. Measurement of Work Effort 22 3.4 Research Instruments 23 3.4.1 Survey Design 23 3.4.2. In-depth Interview Design 23 3.5 Sampling Plan and Data Collection 25 3.6. Methods and Techniques 26 3.6.1. Descriptive Statistic Analysis 26 3.6.2. Reliability Analysis - Cronbach’s Alpha 26 3.6.3. Confirmatory Factor Analysis (CFA) 27 3.6.4. Multiple Regression Analysis 28 3.7. Summary 28 CHAPTER 4 DATA ANALYSIS AND RESULTS 29 4.1 Introduction 29 4.2 Rewording 29 4.3 Data analysis and result 30 4.3.1 Descriptive Statistic for Demographics 30 4.3.2 Descriptive Statistic for Variables 32 4.3.3 Reliability Analysis- Cronbach’s Alpha 34 4.3.4 Confirmatory factor analysis 36 4.3.5. Multiple Regression Analysis 38 4.4. Summary of Key Findings and Discussion 48 4.5 Summary 51 CHAPTER 5 CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 52 5.1. Introduction 52 IV 5.2. Managerial Implications 52 5.3. Limitations and Suggestion for Further Researches 55 References 57 APPENDIX 67 Appendix 1: Questionnaire ( in English version) 67 Appendix 2: Questionnaire (In Vietnamese version) 71 Appendix 3: Confirmatory Factor Analysis 75 Appendix 4: Multiple Regression Analysis 83 V List of Tables Table 3.1. Scale items for Perceived Threat construct…………………… ……………18 Table 3.2. Scale items for Perceived Control construct……………….………………… 19 Table 3.3. Scale items for Perceived Fairness construct ……….………………………….20 Table 3.4. Scale items for Self-esteem construct ………………………………………….21 Table 3.5. Scale items for Economic Need to Work ………………………………………22 Table 3.6. Scale items for Work Effort construct ………………………………………….22 Table 4.1. Descriptive Statistic for Demographics …….…………………… ….……… 29 Table 4.2. Rewording ……………………………………… ………………… ……… 30 Table 4.3. Descriptive Statistic for Variables …………………………………… ………32 Table 4.4. Reliability Analysis- Cronbach’s Alpha ………… ………………… ……….35 Table 4.5. Composite Reliability and Average Variance Extracted ……………… ……37 Table 4.6. Model Summary for Independent Variables …………………… …… …… 39 Table 4.7. Multiple Regression Results with Independent Variables……………… …….40 Table 4.8. Model Summary with Moderating Variable of Self-esteem………….…….….42 Table 4.9. Hierachical Regression Results with Moderating Variable of Self-esteem……45 Table 4.10. Model Summary with Moderating Variable of Economic Need to Work……46 Table 4.11. Hierachical Regression Results with Moderating Variable of Economic Need to Work……………………………………………………………………….………………47 Table 4.12. Results of Hypothesis Test……………………………………………………48 VI List of Figures Figure 2.1. Research Model…………………………………………………………16 Figure 3.1. Research Process……………………………………………………… 17 VII Abstract Layoff survivors' work effort is important for the successful and uninterrupted operations of the organizations that have undergone the process of restructuring in terms of work force reduction. The current study looks into the relationship of various factors relating to perceived threat, perceived control, perceived fairness, self-esteem and economic need to work associated with work effort of layoff survivors in selected organizations in Vietnam. Sample is selected on convenience basis with three hundred and nineteen participants (called survivors of layoff) from seven companies in garment industry and banking are located in Ho Chi Minh City and Binh Duong Province, which have undergone the process of downsizing .Using Confirmatory Factor Analysis (CFA) to measure model fit and illustrates the association between factors of layoff and work effort. The study used Multiple Regression analysis to analyze the relationship between factors of layoff and work effort, Hierarchical Multiple Regression to test the moderating effect of self- esteem and economic need to work on the relationship between perceived threat and work effort. Result indicates that perceived threat, perceived control, self-esteem has a statistically significant effect on work effort, however; perceived fairness and economic need to work are not related to work effort. Self-esteem and economic need to work in this study play role as independent variables and moderating variables. The findings of this study show that self-esteem moderates the relationship between perceived threat and work effort; perceived fairness and work effort; perceived control and work effort. Similarly, economic need to work also has the moderating effect on the relationship between perceived threat and work effort. Based on these findings, implications for managing downsizing, restructuring and layoff has been discussed. 1 CHAPTER 1. INTRODUCTION 1.1 Research Background The world has been globalised which has affected the structure and jobs of many organizations. Vietnam, like the countries of Asia has faced an economic crisis since 2007s which have created some hurdles for motivating the employees. There are improvements that organizations expect from implementing such restructuring strategies: decreased bureaucracy, faster decision making, increased productivity and better earnings (Arnold & Staffelbach, 2012, Introduction section). A mixture between the globalization and the economic crisis has forced many organizations to downsize and restructure to create layoff events and its impacts in job insecurity, layoff fairness among employers and employees, employees’ control in laying off situation, employees’ self-esteem and their economic need to work regarding to their work effort during and after layoff events. The present study was motivated from previous studies about layoff perception and its related issues published in many countries from Western, Eastern to Asia. A considerable amount of literature has been published on layoff perception. Surveys such as that conducted by Brockner (1992) showed that if perceived threat and control are both high, survivors should feel neither complacement nor helpless, and thus should work relatively hard. One decade later, Brockner et al., (2004) reported two cases tested which showed that the negative impact of layoffs on survivors’ organizational commitment was reduced when perceived control was relatively high. Another test showed that the tendency for survivors’ job performance to be adversely affected by high threat to their well-being was reduced when perceived control was relatively high. In other words, perceived control was more strongly related to employees’ organizational commitment in the presence than in the absence of layoffs and to survivors’ job performance when they experienced the post-layoff environment as more threatening. Several researchers pointed to some of the way when employers do not fulfill employees’ promises and obligations, the employees reciprocated by [...]... those whose economic need to work is relatively high Economic need to work not only directly effects on work effort it also effects on the relationship between perceived threat and work effort Therefore, H8 and H9 are proposed: H8: Economic need to work is negatively related to work effort H9 Economic need to work will moderate the relationship between perceived threat and work effort 15 2.3 Research Model... of future layoffs was high, and that the worry level of low self-esteem survivors was unrelated to their work motivation when the threat of future layoffs was low Therefore H4, H5, H6 and H7 are proposed: H4: Self-esteem is positively related to work effort H5: Self-esteem will moderate the relationship between perceived threat and work effort H6: Self-esteem will moderate the relationship between perceived... when the threat of future layoffs was high , and that the worry level of low selfesteem survivors was unrelated to their work motivation when the threat of future layoffs was low Furthermore, Brockner (1992) found that there was a moderating effect of economic need to work on the relationship between perceived threat of layoff and work effort In conclusion, work effort in layoff situation is affected... control and work effort Survivors who are major breadwinners in their households are likely to be greatly influenced by their level of job insecurity (Brockner et al., 1992, p 415), whereas those who are not major breadwinners are less likely to translate their feelings of job insecurity into their work effort need to work moderates the relationship between threat of future layoff and work effort The relationship. .. decisions; to set up the communicating strategies before, during and after layoff events The next chapter provides the literature of layoff events (including 5 perceived threat, perceived control, perceived fairness, self-esteem and economic need to work) , work effort, the relationship between work effort and each factor of layoff events CHAPTER 2 LITERATURE REVIEW, HYPOTHESES AND RESEARCH MODEL 2.1... implements, the injuries mostly involved abrasions, cuts or gashes to the wrists, hands or arms The researchers speculate that, under threat of layoff, the workers were working harder and faster, hoping to make themselves more valuable to the company, thereby cutting corners and paying insufficient attention to safety precautions In the study of layoff and surviving employees'- the relationship between. .. insecurity and work effort of Brockner et al (1994), the results indicate that moderate levels of job insecurity in the 7 face of layoffs will lead survivors to increase work effort, particularly when they are the major breadwinners in their households The data also indicates that most respondents viewed the threat of a layoff as high and their ability or the firm's ability to minimize the consequences... closure, and another plant where some of the employees were required to change their working hours to the night shift or risk layoff Workers are surveyed at the time of these stressful changes and six months later At each of these times, workers indicate how often during a typical shift they will "ignore safety rules and regulations at work" or "take shortcuts to get the job done faster." They are... on layoff and behaviors of employees during and after layoff none of the study has been conducted on the complicated relationships among the effects of layoff perceived threat, perceived fairness, perceived control, self-esteem and economic need to work at the same time, especially in Vietnam context Therefore, layoffs 4 The current study is based on the findings from the data collection to verify the. .. if survivors in Vietnam companies will experience the same reactions as can be found in other countries all over the world 1.3 Research Scope The study focuses on layoff perception in the situations of downsizing and restructuring of organizations; it examines the effects of layoff to those who remain in the organizations during and after layoff wave Study has a clear definition of the variables, and . illustrates the association between factors of layoff and work effort. The study used Multiple Regression analysis to analyze the relationship between factors of layoff and work effort, Hierarchical. variables. The findings of this study show that self-esteem moderates the relationship between perceived threat and work effort; perceived fairness and work effort; perceived control and work effort. . fairness, self-esteem and economic need to work) , work effort, the relationship between work effort and each factor of layoff events. CHAPTER 2. LITERATURE REVIEW, HYPOTHESES AND RESEARCH MODEL