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Accountants as layoff survivors: A research note
Accounting, Organizations and Society 34 (2009) 787–795
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Accounting, Organizations and Society journal homepage: www.elsevier.com/locate/aos
Accountants as layoff survivors: A research note John T. Sweeney a,*, Jeffrey J. Quirin b a b
Department of Accounting, Washington State University, Pullman, WA 99164, United States School of Accountancy, Wichita State University, Wichita, KS 67260, United States
a r t i c l e
i n f o
a b s t r a c t The beginning of the 21st century was witness to a wave of global forces and economic shocks that threatened the job security of accountants. Events such as the bursting of the stock market bubble, outsourcing, restructurings, and 9/11 created a dramatic rise in layoffs of white-collar workers. Drawing from theoretical and empirical research in the management and psychology literatures, the current study employed a field survey in testing a comprehensive model of the relationship among layoff survivors’ perceptions, psychological states, attitudes, and intentions. Our sample consisted of 125 accountants who had survived recent workforce reductions at a United States aircraft manufacturer in the wake of reduced demand following 9/11. The results of our structural equation analyses indicated that accounting survivors’ perceptions of procedural and interactional organizational justice affected their post-layoff stress and job insecurity, which in turn directly and indirectly influenced job satisfaction, affective commitment, and intent to turnover. Ó 2008 Elsevier Ltd. All rights reserved.
I. Introduction Organizational accountants are increasingly vulnerable to the loss of their jobs. Outsourcing, globalization, reorganizations, restructures, mergers, and economic shocks represent contemporary threats to their job security. For layoff victims, the loss of a job can be personally and economically devastating. For survivors of layoffs, the memory of previous workforce reductions and the possibility of additional cutbacks create uncertainty over future job prospects. For management of the downsized entity, understanding how to minimize layoff shock on the remaining employees can reduce the negative impact of workforce reductions, increasing the organization’s prospects for survival, and decreasing the likelihood of future job cuts. Drawing from theoretical and empirical research in the management and psychology literatures, we developed and tested a comprehensive, structural model of the relationship among layoff survivors’ perceptions, psychological * Corresponding author. E-mail addresses: [email protected] (J.T. Sweeney), jeffrey.quirin@ wichita.edu (J.J. Quirin). 0361-3682/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.aos.2008.04.005
states, attitudes, and intentions. The sample consisted of 125 accountants/analysts at a large United States aircraft manufacturer whom had recently survived significant workforce reductions in the wake of reduced demand following 9/11. The results of our study indicated that survivors’ perceptions of procedural and interactional organizational justice affected their post-layoff stress and job insecurity, which in turn directly and indirectly influenced job satisfaction, affective commitment, and intent to turnover. This study contributes to the accounting research literature on several dimensions. First, it introduces to the literature the phenomenon of accountants as layoff survivors. This is important because organizational accountants at the beginning of the 21st century face escalating threats to their job security, including globalization, technology/automation, and outsourcing (Friedman, 2005). Second, our model of the impact of organizational justice on survivor reactions, including stress, job insecurity, and important job-related attitudes, represents a more comprehensive testing of theoretically and empirically-derived relationships compared to most studies in the extant literature. Third, the results of this study extend the literature
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on organizational justice by providing evidence that procedural justice and interactional justice have distinct contributions in affecting survivors of layoffs. The remainder of this paper is organized into four sections. The first section presents the literature review and theoretical development, while the second section discusses the research method, including data collection and measurement information. In the third section, empirical results are presented. The final section contains a discussion of the implications of the research and conclusions.
managers who provide adequate information in advance and demonstrate interpersonal sensitivity may mitigate potential negative reactions (Brockner et al., 1990; Konovsky & Folger, 1991; Mansour-Cole & Scott, 1998; Spreitzer & Mishra, 2002), while work force reductions conducted impersonally and abruptly may provoke resentment and retaliation (Konovsky & Folger, 1991; Skarlicki & Folger, 1997). Layoffs and fairness
Workforce reductions have profound effects on the psychological contract1 between organizations and employees (Bauer, Morrison, & Callister, 1998; Robinson, 1996; Robinson & Rosseau, 1994). Traditionally, this contract has been relational in nature, as job security resulted from the employee’s diligence and dedication. In recent years, the employer–employee relationship has become more transactional, eroding guarantees of job security (Parks & Kidder, 1994). Organizational breaches of the psychological contract with employees are relatively common (Robinson & Rosseau, 1994). At the occurrence of a breach, the employee revises the contract, trust declines, and expectations are adjusted (Robinson, 1996). A layoff violates employees’ expectations of future employment, and their reactions are likely to be negative and potentially harmful to the organization (Brockner, DeWitt, Grover, & Reed, 1990; Robinson & Rosseau, 1994). Survivors of the layoff may respond by distancing themselves and engaging in behaviors that are dysfunctional, such as retaliation (Brockner, Grover, Reed, DeWitt, & O’Malley, 1987; Folger & Skarlicki, 1998; Fowke, 1998; Konovsky & Folger, 1991). Layoffs also have the potential to produce a number of generally undesirable psychological states for survivors. Job stress and job insecurity2 are likely to increase following a layoff, and these negative affective states have the potential to influence important work attitudes and behaviors, including commitment, satisfaction, performance, and turnover (Brockner, 1992; Brockner, Siegal, Daly, Tyler, & Martin, 1997; Brockner et al., 2004; Greenhalgh & Rosenblatt, 1984; Kim, 2003; Konovsky & Brockner, 1993). Anger, relief, guilt, and resentment are reactions commonly experienced by employees remaining after a layoff (Brockner, 1988; Konovsky & Brockner, 1993). The manner in which management conducts the layoff serves to inform survivors about the treatment that they can expect in the future from the organization, and prior research has indicated that survivor responses are partially dependent upon how fairly they perceive the layoff (Brockner, 1988, 2002; Folger & Skarlicki, 1998; Robinson & Rosseau, 1994; Spreitzer & Mishra, 2002). For example,
Prior research suggests that employees view their organization as an active agent of justice (Schminke, Cropanzano, & Rupp, 2002). Organizational justice theory posits that employees’ feelings of equity in the workplace and their reactions to unwanted outcomes are determined primarily by how decisions affecting them are made and the personal treatment they received from management (Aquino, Griffeth, Allen, & Horn, 1997; Bies, 1989; Brockner, 2002; Folger & Konovosky, 1989; Greenberg, 1990). When organizational decision outcomes are negative, employees are more willing to accept responsibility for their situation in the presence of fair procedures (Brockner, 2002). However, if procedures underlying unwanted outcomes are perceived as unfair, employees are more likely to react negatively (Skarlicki & Folger, 1997; Spreitzer & Mishra, 2002). Greenberg (1990) distinguished two aspects of organizational justice as distinct elements in survivor reactions to layoffs: procedural justice, relating to the structural characteristics of the decision, and interactional justice, relating to the interpersonal aspects of the decision.3 Procedural justice refers to how employees perceive the fairness of formal procedures, decision processes, and mechanisms (Greenberg, 1990). For example, the criteria used to determine who to layoff and the amount of advance notice the organization gives to laid-off employees are components of procedural justice (Spreitzer & Mishra, 2002). Survivor perceptions of a fair process may result from a layoff decision rule based upon relevant inputs, and from equitable treatment for laid-off employees (Brockner, 1988). Prior research examining survivors’ reactions to layoffs has focused primarily on procedural justice (Brockner, 1992, 2002). This research has indicated that the negative impact of an unfavorable decision, such as a layoff, is lessened in the presence of a fair process (Brockner, 2002; Brockner, Wiesenfield, & Martin, 1995; Brockner et al., 1997; Greenberg, 1990; Skarlicki & Folger, 1997). From an instrumental perspective, procedural justice is important to layoff survivors because of its inference for outcomes that they may receive in the future (Brockner, 2002; Thibaut & Walker, 1975). From a relational perspective, procedural justice is important to layoff survivors because it suggests that their social and psychological needs are more likely to be addressed when management is procedurally fair (Brockner, 2002; Spreitzer & Mishra, 2002; Tyler & Lind, 1992).
1 The psychological contract refers to ‘‘employees’ perceptions of what they owe to their employers and what their employers owe to them” (Robinson, 1996, p. 574). 2 Job insecurity occurs when an employee perceives the future of his or her job as ‘‘unstable or at risk” (Probst, 2003, p. 452).
3 Distributive justice, a third type of organizational justice, refers to the perceived fairness of compensation or rewards an employee receives from the organization (Folger & Konovosky, 1989). Prior research on distributive justice in downsized organizations has focused on survivor perceptions of the fairness of outcomes for layoff victims (Mishra & Spretizer, 1998).
Literature review and theoretical development Overview of layoffs
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Interactional justice refers to the perceived quality of interpersonal treatment employees receive from superiors within the organization. In the context of layoffs, components of interactional justice would include the adequacy of explanations, and the respect, empathy, and sensitivity accorded by management to the laid-off employees and survivors (Bies & Moag, 1986; Skarlicki & Folger, 1997; Tyler & Bies, 1990). Brennan and Skarlicki (2004) maintain that because immediate supervisors have greater control over interactional justice, it is the most important dimension of organizational justice to layoff survivors. Employees who receive affirmative interpersonal treatment by management during a layoff may respond less negatively, increasing the likelihood that the organization will meet its objectives (Brockner, 1992). Skarlicki and Folger (1997) found that employees were less likely to retaliate in response to outcomes perceived as unfair when supervisors treated them with sensitivity, dignity, and respect. Post-layoff work environment In the post-layoff work environment, survivors are likely to experience the psychological states of high job stress and job insecurity (Brockner, 1988; Brockner et al., 2004; Cascio, 1993; Greenhalgh & Rosenblatt, 1984; Spreitzer & Mishra, 2002). Lazarus and Folkman (1984) contend that stress results when an individual perceives an environmental threat, such as future job reductions, and feels unable to control the situation or counteract the threat. Consistent with this notion, Brockner (1992) and Brockner et al. (2004) found that survivors generally experienced increased job insecurity after a layoff because of uncertainty regarding the potential for additional layoffs and a perceived inability to control the outcome. Furthermore, because workloads can increase and job roles change following a layoff, survivors may experience feelings of being overwhelmed (Brockner, 1992; Mishra & Spreitzer, 1998), and often report burnout symptoms (Cascio, 1993). The high stress environment encountered by post-layoff employees may limit their effectiveness in meeting organizational goals by negatively impacting important attitudes and behaviors (Brockner et al., 2004). A perceived lack of organizational justice, the demands of the post-layoff work place, and uncertainty regarding future employment can contribute to survivors’ job stress (Brockner, 1988; Brockner et al., 2004; Fowke, 1998). Stress has been linked to a number of job attitudes, including job satisfaction, affective organizational commitment, and turnover intentions (Almer & Kaplan, 2002; Choo, 1986; Cordes & Dougherty, 1993; Fogarty, Singh, Rhoads, & Moore, 2000; Maslach, Schaufeli, & Leiter, 2001). Stress can also affect job performance, having a positive effect at moderate levels but a negative impact at higher levels (Choo, 1986). Hypotheses Based upon the preceding discussion, the following hypotheses are presented regarding the impact of organizational justice on the reactions of surviving accountants to layoffs:
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H1: Accounting survivors’ post-layoff perceptions of procedural justice will be negatively related to their job stress, job insecurity, and intent to turnover, and positively related to their job satisfaction. H2: Accounting survivors’ post-layoff perceptions of interactional justice will be negatively related to their job stress, job insecurity, and intent to turnover, and positively related to their job satisfaction. H3: Accounting survivors’ post-layoff job insecurity will be positively related to their job stress, and negatively related to their job satisfaction and affective organizational commitment. H4: Accounting survivors’ post-layoff job stress will be negatively related to their job satisfaction and affective organizational commitment. Theoretical model In sum, the study hypothesizes that accounting survivors of layoffs who perceive their post-layoff organization as high in procedural justice and interactional justice are likely to experience less job stress and job insecurity (Brennan & Skarlicki, 2004; Brockner, 1988; Brockner, 2002; Brockner et al., 1995; Brockner et al., 1997; Fowke, 1998). Furthermore, the study hypothesizes that accounting survivors’ perceptions of procedural justice and interactional justice are likely to affect important job attitudes, such as job satisfaction and intent to remain with the organization (Aquino et al., 1997; McFarlin & Sweeney, 1992). The theoretical model of the influence of organizational justice on layoff survivors’ job stress, job insecurity, satisfaction, commitment, and intent to turnover is depicted in Fig. 1. The model suggests that survivor perceptions of organizational justice affect important job-related psychological states, which in turn influence important attitudes towards the organization and the job. Each path in the model posits a directional influence between antecedent and outcome variables. In addition to the hypothesized relationships, the model also includes several control paths. The path between interactional justice and procedural justice controls for their potential correlation (Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Spreitzer & Mishra, 2002). The influences of job satisfaction and affective organizational commitment on intent to turnover are also controlled for in the model. Research method Data collection Data were collected with a field survey administered to a total of 167 accounting/analyst employees from a large aircraft manufacturing company attending a companysponsored departmental training seminar.4 The company
4 All participants worked in the same department. Management indicated that the functions and tasks of accountants and analysts were very similar and often crossed over job titles. The subject pool is therefore referred to as accountants.
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Fig. 1. Theoretical model.
had recently imposed significant layoffs as a response to reduced aircraft demand, and all employees in the survey were hired before the layoffs. During the preceding 2-year period, the company had terminated, in stages, approximately 30% of its workforce. The subjects in this study represented survivors of the layoffs, and our data were gathered immediately after the last layoff. Similar layoffs had occurred at other aircraft manufacturers in the region, limiting alternative employment opportunities for survivors. For inclusion in the study, respondents were required to be employed in the position of accountant/analyst or higher. As part of the training seminar, a survey instrument packet was distributed directly to each employee by one of the researchers. Accompanying each questionnaire was a cover letter containing instructions for completing the survey. Participation was voluntary and subjects were assured of anonymity. Participants provided demographic data but did not otherwise identify themselves, and were allowed approximately 15 min to complete the research instrument. Of the 167 survey packets distributed, 125 employees chose to participate and returned a completed instrument, for a response rate of 75%. The employees who chose not to participate returned a blank or uncompleted instrument to the researcher.5 The average respondent was 40-year old, had been with the organization for 8.5 years, and held the position of senior analyst/senior accountant. Males and females were represented almost equally in the sample, with a 47% and 53% breakdown, respectively.
5 A test for response bias between participants and non-participants was not possible due to the anonymity given to the respondents.
Measures The variables measured in the questionnaire include procedural justice, interactional justice, job exhaustion, job satisfaction, affective commitment, job insecurity, and intent to turnover. All measures were drawn from prior literature and, unless indicated, utilized seven-point Likerttype response scales, with higher scores corresponding to higher values for the construct. Summed totals from the variable measures were utilized in model testing. Descriptive statistics for all variables in the model are reported in Table 1. Procedural justice was measured using the eight-item scale developed by Folger and Konovosky (1989). The scale addressed the degree to which the formal procedures of the organization demonstrated ‘‘consistency, bias suppression, accuracy, correctability, representativeness, and ethicality” (Folger & Konovosky, 1989, p. 437). The Cronbach alpha for the eight-item measure in the current study was 0.90. Interactional justice was measured with a nine-item scale (Moorman, 1991; Skarlicki & Folger, 1997) that gauged a subject’s beliefs regarding interpersonal treatment received from superiors. Skarlicki, Folger, and Tesluk (1999) provide evidence of strong reliability and validity for both the interactional justice and the procedural justice measures. The Cronbach alpha for the nine-item measure in the current study was 0.95. Stress was measured using the nine-item exhaustion scale from the maslach burnout inventory (MBI) (Maslach & Jackson, 1986; Maslach et al., 2001), a well-accepted and validated measure of job stress (Cordes & Dougherty, 1993; Moore, 2000). Prior research has reported strong fac-
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torial, convergent, and discriminant validity as well as high reliability for the measure (Byrne, 1991; Cordes, Dougherty, & Blum, 1997; Maslach & Jackson, 1986). The Cronbach alpha for the nine-item measure in the current study was 0.88. Job satisfaction was assessed with a three-item measure from the job diagnostic survey (Hackman & Oldham, 1975). The Cronbach alpha for the three-item measure in the current study was 0.79. Affective organizational commitment was assessed using the eight-item affective commitment subscale of the organizational commitment measure developed by Allen and Meyer (1990). The measure has demonstrated adequate validity and reliability (Meyer & Allen, 1991). The Cronbach alpha for the eight-item measure in the current study was 0.87. Job insecurity was measured using the nine-item job security index (JSI) developed by Probst (2003). Respondents indicate the extent to which the item describes their job on a three-point scale, with responses of ‘‘yes”, ‘‘?”, and ‘‘no”. Probst (2003) reports adequate psychometric properties for the JSI. The Cronbach alpha for the nine-item measure in the current study was 0.91. Intent to turnover was measured using one question from Dougherty and Pritchard (1985). The item frames the question in terms of how much the subject, without any constraints preventing him or her from leaving, would prefer to remain with the organization. The item was constructed on a seven-point Likert-type scale anchored by (1) would very much prefer to leave, and (7) would very much prefer to stay. The question was reverse-scored in the data analyses, with higher values indicative of a stronger intent to turnover. Empirical results Analyses Table 2 reports the correlation matrix for the variables. As shown in the table, all variables were significantly correlated in the predicted direction. The relatively high correlation between procedural justice and interactional justice suggests the possibility that Table 1 Descriptive statistics. Variable
Meana
Procedural justice Interactional justice Job stress Job satisfaction Affective commitment Job insecurity Intent to turnover
36.19
Standard deviation
Observed range
Cronbach alpha
8.06
14–56
0.90
47.86
10.82
14–63
0.95
26.39 14.61 33.86
9.39 4.05 9.06
9–56 3–21 8–51
0.88 0.79 0.87
17.32 3.26
5.81 2.02
9–27 1–7
0.91 –
a Mean values represent the mean of each summed instrument with the exception of the intent to turnover variable, which was measured using one-item.
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the scales may be representing substantially overlapping constructs. To determine whether the procedural and interactional justice constructs were distinct, we conducted a confirmatory factor analysis on the combined items from the two scales. The standardized loadings clearly indicated two distinct factors. All eight procedural justice items loaded above .50 on the first factor, and all nine interactional justice items loaded above .50 on the second factor. No items cross-loaded above .31.6 Fig. 2 reports the results of the structural equation model used to evaluate the relationships contained in the theoretical model. An advantage of structural equation modeling is that it provides an efficient technique for estimating interrelated dependence relationships, such as those proposed in this study (Hartmann & Moers, 1999; Shields & Shields, 1998). The two-stage analysis method recommended by Anderson and Gerbing (1988) was employed utilizing summed or ‘‘parceled” scores from the construct scales. The parceling approach is commonly adopted in empirical studies as a means of obtaining item distributions that are more continuous and normally distributed (Bandalos, 2002), and is appropriate when the unexplained variance of the latent variables is modeled by incorporating a measure of scale reliability (Sass & Smith, 2006). As reliance upon a single measure of fit can be problematic, multiple measures of overall model fit were computed and are reported. The theoretical model appeared to possess a good fit, as the adjusted goodness of fit index (AGFI), normed fit index (NFI) (Bentler & Bonett, 1980), nonnormed fit index (NNFI) (Bentler & Bonett, 1980), and comparative fit index (CFI) (Bentler, 1990) values approached 1.0 in all instances. All significant paths in the model were in the predicted direction. Tabular results of the structural equation analysis are summarized in Table 3. As indicated in Table 3, and consistent with the high model fit indices, a large majority of the hypothesized relationships were significant. As predicted in H1, survivors’ perceptions of procedural justice positively impacted job insecurity and job satisfaction. The higher the procedural justice perceived by layoff survivors, the more secure they felt about the future of their job, and the more satisfied they were with that job. Procedural justice did not directly affect job stress, but did indirectly influence it through its effect on job insecurity. Contrary to predictions, survivors’ turnover intentions were not directly affected by their perceptions of procedural justice. H2 is supported by significant, negative paths between survivor perceptions of interactional justice and their levels of job insecurity and job stress. This suggests that surviving employees who perceived higher levels of interactional justice had less job insecurity and experienced less stress. Also consistent with H2, interactional
6 Research investigating the distinctiveness of the procedural and interactional justice constructs has demonstrated that they have different correlates or independent effects, or both (e.g., Cropanzano & Prehar, 1999; Skarlicki & Folger, 1997). Colquitt et al. (2001), utilizing a meta-analysis of 120 studies, found that procedural justice and interactional justice are empirically distinguishable constructs.
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Table 2 Correlation matrix.
PRO INT STR SATIS AOC SEC TUR
PRO
INT
STR
SATIS
AOC
SEC
TURN
1.000
0.558** 1.000
0.248* 0.322** 1.000
0.452** 0.513** 0.371** 1.000
0.429** 0.356** 0.372** 0.699** 1.000
0.339** 0.311** 0.294** 0.334** 0.393** 1.000
0.289** 0.358** 0.331** 0.428** 0.575** 0.271** 1.000
n = 125. PRO, procedural justice; INT, interactional justice; STR, job stress; SATIS, job satisfaction; AOC, affective commitment; SEC, job insecurity; TURN, intent to turnover. * p < .01. ** p < .001 (one-tailed significance).
Fig. 2. Structural equation model with path coefficients.
justice was positively related to survivors’ job satisfaction and negatively related to their intent to turnover. As predicted in H3, higher job insecurity increased survivors’ job stress, and decreased their affective commitment to the organization. However, job insecurity impacted job satisfaction at only a marginal level (p < .074). Consistent with H4, job stress was inversely related to job satisfaction, suggesting that layoff survivors who experienced greater stress were less satisfied with their jobs. Survivors’ job stress only marginally influenced their affective commitment (p < .075). The control paths between procedural justice and interactional justice, job satisfaction and affective commitment,
and affective commitment and intent to turnover were significant and in the predicted direction. The results of the structural equation model indicated that the theoretical model was well-specified and provided substantial support for the hypotheses. An additional advantage of using structural equation modeling is the ability of the technique to identify paths or relationships contained in the theoretical model that impair model fit, thereby allowing the researcher to determine a best-fit or optimal model. We compared the results of the theoretical model in Fig. 1 to the optimal model. The paths indicated in the model were consistent with the hypotheses and the results were virtually identical to those of the theoretical model. A chi-square difference test indi-
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J.T. Sweeney, J.J. Quirin / Accounting, Organizations and Society 34 (2009) 787–795 Table 3 Structural equation modeling results for the theoretical model. Dependent variable
Independent variable
Directional prediction
PRO SEC
INT PRO INT PRO INT SEC PRO INT STR SEC STR SEC SATIS PRO INT SATIS AOC
+ H1, H2, H1, H2, H3, + H1, + H2, + H4, H3, H4, H3, + H1, H2,
STR
SATIS
AOC
TURN
Path coefficient 0.558 0.241 0.177 0.050 0.231 0.205 0.194 0.308 0.190 0.117 0.099 0.160 0.609 0.043 0.208 0.044 0.547
t-Statistic 7.49 2.40 1.76 0.49 2.28 2.30 2.18 3.43 2.43 1.48 1.46 2.39 8.83 0.38 2.06 0.37 5.26
p-Value 0.001 0.009 0.042 0.316 0.013 0.012 0.017 0.001 0.009 0.074 0.075 0.010 0.001 0.322 0.014 0.346 0.001
n = 125.
cated that the variance accounted for by the optimal model was not significantly different from that attributable to the theoretical model.7 Implications and conclusions At the beginning of the 21st century, accountants faced increasing threats to their job security, including outsourcing and the offshore transfer of administrative functions (Friedman, 2005). For accountants who involuntary lose their job as a result of downsizing, the psychological and economic affects can be severe. For the downsized organization, survival may depend on the commitment and continued employment of those employees who remain. Downsizing, however, breaks the psychological employment contract (Robinson, 1996), potentially creating insecurity and stress in survivors, and often results in increased voluntary turnover (Spreitzer & Mishra, 2002). This study extends previous research on layoff survivors to the domain of accounting. The results of our model largely supported theoretical predictions and confirmed that organizational justice concepts have relevance in understanding survivors’ post-layoff perceptions, psychological states, attitudes, and intentions. Managerial accountants who perceived high levels of procedural and interactional justice after surviving layoffs exhibited less job stress and felt less job insecurity. Furthermore, accountants who felt less stressed and less insecure were, in general, more satisfied with their jobs, more committed to their organization, and had stronger intentions of leaving the organization. These results confirm the importance of procedural justice and interactional justice in minimizing the negative impact of layoffs on survivors There are both theoretical and practical implications of this research. First, procedural and interactional justice each had significant influence on survivors’ psychological
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For more detailed analysis of the data, please contact the authors.
states and attitudes, but only interactional justice directly impacted their intention to turnover. This result indicates that management can play an active and positive role in influencing survivors’ reactions to a layoff and desire to continue the employment relationship, and is consistent with Brennan and Skarlicki’s (2004) emphasis on the importance of interactional justice. Second, although layoffs are often viewed by employees as an undesirable form of change, the survivors in our sample had both relatively high levels of affective commitment to the organization and high levels of job insecurity. This apparent paradox implies that employees can feel allegiance even in the wake of downsizing and potential threats to their job. Third, the sample in this study survived layoffs attributable to causes external to the organization. It is unclear whether the results of this study would apply when a layoff results from internal factors, such as managements’ decision to offshore an accounting task. The recent growth in outsourcing, both in public accounting and in corporate accounting (Friedman, 2005), provides opportunities for future research. Fourth, our data were collected after a series of layoffs had commenced. Future research on the impact of layoffs may also contribute to the extant knowledge base by longitudinally investigating the cumulative effect of successive workforce reductions on survivor reactions and productivity. While the results of this study are substantially consistent with theoretical predictions, their interpretation is subject to a number of limitations. First, survey studies lack the control of experimental designs and may be exposed to potential biases sometimes associated with self-reporting. Second, problems of omitted and uncontrolled intervening or moderating variables may exist. Third, the measure of survivors’ intent to turnover was based upon self-reported intentions. The extent to which the measure is correlated with actual voluntary turnover is unknown. Finally, this study focused only on accountants employed within a manufacturing organization. Additional research is needed to ascertain the extent of
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Skarlicki, D. P., & Folger, R. (1997). Retaliation in the workplace: The roles of distributive, procedural, and interactional justice. Journal of Applied Psychology, 82, 434–443. Skarlicki, D. P., Folger, R., & Tesluk, P. (1999). Personality as a moderator in the relationship between fairness and retaliation. Academy of Management Journal, 42, 100–108. Spreitzer, G. M., & Mishra, A. K. (2002). To stay or go: Voluntary survivor turnover following an organizational downsizing. Journal of Organizational Behavior, 23, 707–729. Thibaut, J., & Walker, L. (1975). Procedural justice: A psychological analysis. Hillsdale, NJ: Lawrence Erlbaum Associates, Publishers. Tyler, T. R., & Bies, R. J. (1990). Beyond formal procedures: The interpersonal context of procedural justice. In J. S. Carroll (Ed.), Applied social psychology and organizational settings (pp. 77–98). Hillsdale, NJ: Lawrence Erlbaum Associates, Publishers. Tyler, T. R., & Lind, E. A. (1992). A relational model of authority in groups. In M. Zanna (Ed.). Advances in experimental social psychology (Vol. 25, pp. 115–191). New York, NY: Academic Press.
Contents lists available at ScienceDirect
Accounting, Organizations and Society journal homepage: www.elsevier.com/locate/aos
Accountants as layoff survivors: A research note John T. Sweeney a,*, Jeffrey J. Quirin b a b
Department of Accounting, Washington State University, Pullman, WA 99164, United States School of Accountancy, Wichita State University, Wichita, KS 67260, United States
a r t i c l e
i n f o
a b s t r a c t The beginning of the 21st century was witness to a wave of global forces and economic shocks that threatened the job security of accountants. Events such as the bursting of the stock market bubble, outsourcing, restructurings, and 9/11 created a dramatic rise in layoffs of white-collar workers. Drawing from theoretical and empirical research in the management and psychology literatures, the current study employed a field survey in testing a comprehensive model of the relationship among layoff survivors’ perceptions, psychological states, attitudes, and intentions. Our sample consisted of 125 accountants who had survived recent workforce reductions at a United States aircraft manufacturer in the wake of reduced demand following 9/11. The results of our structural equation analyses indicated that accounting survivors’ perceptions of procedural and interactional organizational justice affected their post-layoff stress and job insecurity, which in turn directly and indirectly influenced job satisfaction, affective commitment, and intent to turnover. Ó 2008 Elsevier Ltd. All rights reserved.
I. Introduction Organizational accountants are increasingly vulnerable to the loss of their jobs. Outsourcing, globalization, reorganizations, restructures, mergers, and economic shocks represent contemporary threats to their job security. For layoff victims, the loss of a job can be personally and economically devastating. For survivors of layoffs, the memory of previous workforce reductions and the possibility of additional cutbacks create uncertainty over future job prospects. For management of the downsized entity, understanding how to minimize layoff shock on the remaining employees can reduce the negative impact of workforce reductions, increasing the organization’s prospects for survival, and decreasing the likelihood of future job cuts. Drawing from theoretical and empirical research in the management and psychology literatures, we developed and tested a comprehensive, structural model of the relationship among layoff survivors’ perceptions, psychological * Corresponding author. E-mail addresses: [email protected] (J.T. Sweeney), jeffrey.quirin@ wichita.edu (J.J. Quirin). 0361-3682/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.aos.2008.04.005
states, attitudes, and intentions. The sample consisted of 125 accountants/analysts at a large United States aircraft manufacturer whom had recently survived significant workforce reductions in the wake of reduced demand following 9/11. The results of our study indicated that survivors’ perceptions of procedural and interactional organizational justice affected their post-layoff stress and job insecurity, which in turn directly and indirectly influenced job satisfaction, affective commitment, and intent to turnover. This study contributes to the accounting research literature on several dimensions. First, it introduces to the literature the phenomenon of accountants as layoff survivors. This is important because organizational accountants at the beginning of the 21st century face escalating threats to their job security, including globalization, technology/automation, and outsourcing (Friedman, 2005). Second, our model of the impact of organizational justice on survivor reactions, including stress, job insecurity, and important job-related attitudes, represents a more comprehensive testing of theoretically and empirically-derived relationships compared to most studies in the extant literature. Third, the results of this study extend the literature
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on organizational justice by providing evidence that procedural justice and interactional justice have distinct contributions in affecting survivors of layoffs. The remainder of this paper is organized into four sections. The first section presents the literature review and theoretical development, while the second section discusses the research method, including data collection and measurement information. In the third section, empirical results are presented. The final section contains a discussion of the implications of the research and conclusions.
managers who provide adequate information in advance and demonstrate interpersonal sensitivity may mitigate potential negative reactions (Brockner et al., 1990; Konovsky & Folger, 1991; Mansour-Cole & Scott, 1998; Spreitzer & Mishra, 2002), while work force reductions conducted impersonally and abruptly may provoke resentment and retaliation (Konovsky & Folger, 1991; Skarlicki & Folger, 1997). Layoffs and fairness
Workforce reductions have profound effects on the psychological contract1 between organizations and employees (Bauer, Morrison, & Callister, 1998; Robinson, 1996; Robinson & Rosseau, 1994). Traditionally, this contract has been relational in nature, as job security resulted from the employee’s diligence and dedication. In recent years, the employer–employee relationship has become more transactional, eroding guarantees of job security (Parks & Kidder, 1994). Organizational breaches of the psychological contract with employees are relatively common (Robinson & Rosseau, 1994). At the occurrence of a breach, the employee revises the contract, trust declines, and expectations are adjusted (Robinson, 1996). A layoff violates employees’ expectations of future employment, and their reactions are likely to be negative and potentially harmful to the organization (Brockner, DeWitt, Grover, & Reed, 1990; Robinson & Rosseau, 1994). Survivors of the layoff may respond by distancing themselves and engaging in behaviors that are dysfunctional, such as retaliation (Brockner, Grover, Reed, DeWitt, & O’Malley, 1987; Folger & Skarlicki, 1998; Fowke, 1998; Konovsky & Folger, 1991). Layoffs also have the potential to produce a number of generally undesirable psychological states for survivors. Job stress and job insecurity2 are likely to increase following a layoff, and these negative affective states have the potential to influence important work attitudes and behaviors, including commitment, satisfaction, performance, and turnover (Brockner, 1992; Brockner, Siegal, Daly, Tyler, & Martin, 1997; Brockner et al., 2004; Greenhalgh & Rosenblatt, 1984; Kim, 2003; Konovsky & Brockner, 1993). Anger, relief, guilt, and resentment are reactions commonly experienced by employees remaining after a layoff (Brockner, 1988; Konovsky & Brockner, 1993). The manner in which management conducts the layoff serves to inform survivors about the treatment that they can expect in the future from the organization, and prior research has indicated that survivor responses are partially dependent upon how fairly they perceive the layoff (Brockner, 1988, 2002; Folger & Skarlicki, 1998; Robinson & Rosseau, 1994; Spreitzer & Mishra, 2002). For example,
Prior research suggests that employees view their organization as an active agent of justice (Schminke, Cropanzano, & Rupp, 2002). Organizational justice theory posits that employees’ feelings of equity in the workplace and their reactions to unwanted outcomes are determined primarily by how decisions affecting them are made and the personal treatment they received from management (Aquino, Griffeth, Allen, & Horn, 1997; Bies, 1989; Brockner, 2002; Folger & Konovosky, 1989; Greenberg, 1990). When organizational decision outcomes are negative, employees are more willing to accept responsibility for their situation in the presence of fair procedures (Brockner, 2002). However, if procedures underlying unwanted outcomes are perceived as unfair, employees are more likely to react negatively (Skarlicki & Folger, 1997; Spreitzer & Mishra, 2002). Greenberg (1990) distinguished two aspects of organizational justice as distinct elements in survivor reactions to layoffs: procedural justice, relating to the structural characteristics of the decision, and interactional justice, relating to the interpersonal aspects of the decision.3 Procedural justice refers to how employees perceive the fairness of formal procedures, decision processes, and mechanisms (Greenberg, 1990). For example, the criteria used to determine who to layoff and the amount of advance notice the organization gives to laid-off employees are components of procedural justice (Spreitzer & Mishra, 2002). Survivor perceptions of a fair process may result from a layoff decision rule based upon relevant inputs, and from equitable treatment for laid-off employees (Brockner, 1988). Prior research examining survivors’ reactions to layoffs has focused primarily on procedural justice (Brockner, 1992, 2002). This research has indicated that the negative impact of an unfavorable decision, such as a layoff, is lessened in the presence of a fair process (Brockner, 2002; Brockner, Wiesenfield, & Martin, 1995; Brockner et al., 1997; Greenberg, 1990; Skarlicki & Folger, 1997). From an instrumental perspective, procedural justice is important to layoff survivors because of its inference for outcomes that they may receive in the future (Brockner, 2002; Thibaut & Walker, 1975). From a relational perspective, procedural justice is important to layoff survivors because it suggests that their social and psychological needs are more likely to be addressed when management is procedurally fair (Brockner, 2002; Spreitzer & Mishra, 2002; Tyler & Lind, 1992).
1 The psychological contract refers to ‘‘employees’ perceptions of what they owe to their employers and what their employers owe to them” (Robinson, 1996, p. 574). 2 Job insecurity occurs when an employee perceives the future of his or her job as ‘‘unstable or at risk” (Probst, 2003, p. 452).
3 Distributive justice, a third type of organizational justice, refers to the perceived fairness of compensation or rewards an employee receives from the organization (Folger & Konovosky, 1989). Prior research on distributive justice in downsized organizations has focused on survivor perceptions of the fairness of outcomes for layoff victims (Mishra & Spretizer, 1998).
Literature review and theoretical development Overview of layoffs
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Interactional justice refers to the perceived quality of interpersonal treatment employees receive from superiors within the organization. In the context of layoffs, components of interactional justice would include the adequacy of explanations, and the respect, empathy, and sensitivity accorded by management to the laid-off employees and survivors (Bies & Moag, 1986; Skarlicki & Folger, 1997; Tyler & Bies, 1990). Brennan and Skarlicki (2004) maintain that because immediate supervisors have greater control over interactional justice, it is the most important dimension of organizational justice to layoff survivors. Employees who receive affirmative interpersonal treatment by management during a layoff may respond less negatively, increasing the likelihood that the organization will meet its objectives (Brockner, 1992). Skarlicki and Folger (1997) found that employees were less likely to retaliate in response to outcomes perceived as unfair when supervisors treated them with sensitivity, dignity, and respect. Post-layoff work environment In the post-layoff work environment, survivors are likely to experience the psychological states of high job stress and job insecurity (Brockner, 1988; Brockner et al., 2004; Cascio, 1993; Greenhalgh & Rosenblatt, 1984; Spreitzer & Mishra, 2002). Lazarus and Folkman (1984) contend that stress results when an individual perceives an environmental threat, such as future job reductions, and feels unable to control the situation or counteract the threat. Consistent with this notion, Brockner (1992) and Brockner et al. (2004) found that survivors generally experienced increased job insecurity after a layoff because of uncertainty regarding the potential for additional layoffs and a perceived inability to control the outcome. Furthermore, because workloads can increase and job roles change following a layoff, survivors may experience feelings of being overwhelmed (Brockner, 1992; Mishra & Spreitzer, 1998), and often report burnout symptoms (Cascio, 1993). The high stress environment encountered by post-layoff employees may limit their effectiveness in meeting organizational goals by negatively impacting important attitudes and behaviors (Brockner et al., 2004). A perceived lack of organizational justice, the demands of the post-layoff work place, and uncertainty regarding future employment can contribute to survivors’ job stress (Brockner, 1988; Brockner et al., 2004; Fowke, 1998). Stress has been linked to a number of job attitudes, including job satisfaction, affective organizational commitment, and turnover intentions (Almer & Kaplan, 2002; Choo, 1986; Cordes & Dougherty, 1993; Fogarty, Singh, Rhoads, & Moore, 2000; Maslach, Schaufeli, & Leiter, 2001). Stress can also affect job performance, having a positive effect at moderate levels but a negative impact at higher levels (Choo, 1986). Hypotheses Based upon the preceding discussion, the following hypotheses are presented regarding the impact of organizational justice on the reactions of surviving accountants to layoffs:
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H1: Accounting survivors’ post-layoff perceptions of procedural justice will be negatively related to their job stress, job insecurity, and intent to turnover, and positively related to their job satisfaction. H2: Accounting survivors’ post-layoff perceptions of interactional justice will be negatively related to their job stress, job insecurity, and intent to turnover, and positively related to their job satisfaction. H3: Accounting survivors’ post-layoff job insecurity will be positively related to their job stress, and negatively related to their job satisfaction and affective organizational commitment. H4: Accounting survivors’ post-layoff job stress will be negatively related to their job satisfaction and affective organizational commitment. Theoretical model In sum, the study hypothesizes that accounting survivors of layoffs who perceive their post-layoff organization as high in procedural justice and interactional justice are likely to experience less job stress and job insecurity (Brennan & Skarlicki, 2004; Brockner, 1988; Brockner, 2002; Brockner et al., 1995; Brockner et al., 1997; Fowke, 1998). Furthermore, the study hypothesizes that accounting survivors’ perceptions of procedural justice and interactional justice are likely to affect important job attitudes, such as job satisfaction and intent to remain with the organization (Aquino et al., 1997; McFarlin & Sweeney, 1992). The theoretical model of the influence of organizational justice on layoff survivors’ job stress, job insecurity, satisfaction, commitment, and intent to turnover is depicted in Fig. 1. The model suggests that survivor perceptions of organizational justice affect important job-related psychological states, which in turn influence important attitudes towards the organization and the job. Each path in the model posits a directional influence between antecedent and outcome variables. In addition to the hypothesized relationships, the model also includes several control paths. The path between interactional justice and procedural justice controls for their potential correlation (Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Spreitzer & Mishra, 2002). The influences of job satisfaction and affective organizational commitment on intent to turnover are also controlled for in the model. Research method Data collection Data were collected with a field survey administered to a total of 167 accounting/analyst employees from a large aircraft manufacturing company attending a companysponsored departmental training seminar.4 The company
4 All participants worked in the same department. Management indicated that the functions and tasks of accountants and analysts were very similar and often crossed over job titles. The subject pool is therefore referred to as accountants.
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Fig. 1. Theoretical model.
had recently imposed significant layoffs as a response to reduced aircraft demand, and all employees in the survey were hired before the layoffs. During the preceding 2-year period, the company had terminated, in stages, approximately 30% of its workforce. The subjects in this study represented survivors of the layoffs, and our data were gathered immediately after the last layoff. Similar layoffs had occurred at other aircraft manufacturers in the region, limiting alternative employment opportunities for survivors. For inclusion in the study, respondents were required to be employed in the position of accountant/analyst or higher. As part of the training seminar, a survey instrument packet was distributed directly to each employee by one of the researchers. Accompanying each questionnaire was a cover letter containing instructions for completing the survey. Participation was voluntary and subjects were assured of anonymity. Participants provided demographic data but did not otherwise identify themselves, and were allowed approximately 15 min to complete the research instrument. Of the 167 survey packets distributed, 125 employees chose to participate and returned a completed instrument, for a response rate of 75%. The employees who chose not to participate returned a blank or uncompleted instrument to the researcher.5 The average respondent was 40-year old, had been with the organization for 8.5 years, and held the position of senior analyst/senior accountant. Males and females were represented almost equally in the sample, with a 47% and 53% breakdown, respectively.
5 A test for response bias between participants and non-participants was not possible due to the anonymity given to the respondents.
Measures The variables measured in the questionnaire include procedural justice, interactional justice, job exhaustion, job satisfaction, affective commitment, job insecurity, and intent to turnover. All measures were drawn from prior literature and, unless indicated, utilized seven-point Likerttype response scales, with higher scores corresponding to higher values for the construct. Summed totals from the variable measures were utilized in model testing. Descriptive statistics for all variables in the model are reported in Table 1. Procedural justice was measured using the eight-item scale developed by Folger and Konovosky (1989). The scale addressed the degree to which the formal procedures of the organization demonstrated ‘‘consistency, bias suppression, accuracy, correctability, representativeness, and ethicality” (Folger & Konovosky, 1989, p. 437). The Cronbach alpha for the eight-item measure in the current study was 0.90. Interactional justice was measured with a nine-item scale (Moorman, 1991; Skarlicki & Folger, 1997) that gauged a subject’s beliefs regarding interpersonal treatment received from superiors. Skarlicki, Folger, and Tesluk (1999) provide evidence of strong reliability and validity for both the interactional justice and the procedural justice measures. The Cronbach alpha for the nine-item measure in the current study was 0.95. Stress was measured using the nine-item exhaustion scale from the maslach burnout inventory (MBI) (Maslach & Jackson, 1986; Maslach et al., 2001), a well-accepted and validated measure of job stress (Cordes & Dougherty, 1993; Moore, 2000). Prior research has reported strong fac-
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torial, convergent, and discriminant validity as well as high reliability for the measure (Byrne, 1991; Cordes, Dougherty, & Blum, 1997; Maslach & Jackson, 1986). The Cronbach alpha for the nine-item measure in the current study was 0.88. Job satisfaction was assessed with a three-item measure from the job diagnostic survey (Hackman & Oldham, 1975). The Cronbach alpha for the three-item measure in the current study was 0.79. Affective organizational commitment was assessed using the eight-item affective commitment subscale of the organizational commitment measure developed by Allen and Meyer (1990). The measure has demonstrated adequate validity and reliability (Meyer & Allen, 1991). The Cronbach alpha for the eight-item measure in the current study was 0.87. Job insecurity was measured using the nine-item job security index (JSI) developed by Probst (2003). Respondents indicate the extent to which the item describes their job on a three-point scale, with responses of ‘‘yes”, ‘‘?”, and ‘‘no”. Probst (2003) reports adequate psychometric properties for the JSI. The Cronbach alpha for the nine-item measure in the current study was 0.91. Intent to turnover was measured using one question from Dougherty and Pritchard (1985). The item frames the question in terms of how much the subject, without any constraints preventing him or her from leaving, would prefer to remain with the organization. The item was constructed on a seven-point Likert-type scale anchored by (1) would very much prefer to leave, and (7) would very much prefer to stay. The question was reverse-scored in the data analyses, with higher values indicative of a stronger intent to turnover. Empirical results Analyses Table 2 reports the correlation matrix for the variables. As shown in the table, all variables were significantly correlated in the predicted direction. The relatively high correlation between procedural justice and interactional justice suggests the possibility that Table 1 Descriptive statistics. Variable
Meana
Procedural justice Interactional justice Job stress Job satisfaction Affective commitment Job insecurity Intent to turnover
36.19
Standard deviation
Observed range
Cronbach alpha
8.06
14–56
0.90
47.86
10.82
14–63
0.95
26.39 14.61 33.86
9.39 4.05 9.06
9–56 3–21 8–51
0.88 0.79 0.87
17.32 3.26
5.81 2.02
9–27 1–7
0.91 –
a Mean values represent the mean of each summed instrument with the exception of the intent to turnover variable, which was measured using one-item.
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the scales may be representing substantially overlapping constructs. To determine whether the procedural and interactional justice constructs were distinct, we conducted a confirmatory factor analysis on the combined items from the two scales. The standardized loadings clearly indicated two distinct factors. All eight procedural justice items loaded above .50 on the first factor, and all nine interactional justice items loaded above .50 on the second factor. No items cross-loaded above .31.6 Fig. 2 reports the results of the structural equation model used to evaluate the relationships contained in the theoretical model. An advantage of structural equation modeling is that it provides an efficient technique for estimating interrelated dependence relationships, such as those proposed in this study (Hartmann & Moers, 1999; Shields & Shields, 1998). The two-stage analysis method recommended by Anderson and Gerbing (1988) was employed utilizing summed or ‘‘parceled” scores from the construct scales. The parceling approach is commonly adopted in empirical studies as a means of obtaining item distributions that are more continuous and normally distributed (Bandalos, 2002), and is appropriate when the unexplained variance of the latent variables is modeled by incorporating a measure of scale reliability (Sass & Smith, 2006). As reliance upon a single measure of fit can be problematic, multiple measures of overall model fit were computed and are reported. The theoretical model appeared to possess a good fit, as the adjusted goodness of fit index (AGFI), normed fit index (NFI) (Bentler & Bonett, 1980), nonnormed fit index (NNFI) (Bentler & Bonett, 1980), and comparative fit index (CFI) (Bentler, 1990) values approached 1.0 in all instances. All significant paths in the model were in the predicted direction. Tabular results of the structural equation analysis are summarized in Table 3. As indicated in Table 3, and consistent with the high model fit indices, a large majority of the hypothesized relationships were significant. As predicted in H1, survivors’ perceptions of procedural justice positively impacted job insecurity and job satisfaction. The higher the procedural justice perceived by layoff survivors, the more secure they felt about the future of their job, and the more satisfied they were with that job. Procedural justice did not directly affect job stress, but did indirectly influence it through its effect on job insecurity. Contrary to predictions, survivors’ turnover intentions were not directly affected by their perceptions of procedural justice. H2 is supported by significant, negative paths between survivor perceptions of interactional justice and their levels of job insecurity and job stress. This suggests that surviving employees who perceived higher levels of interactional justice had less job insecurity and experienced less stress. Also consistent with H2, interactional
6 Research investigating the distinctiveness of the procedural and interactional justice constructs has demonstrated that they have different correlates or independent effects, or both (e.g., Cropanzano & Prehar, 1999; Skarlicki & Folger, 1997). Colquitt et al. (2001), utilizing a meta-analysis of 120 studies, found that procedural justice and interactional justice are empirically distinguishable constructs.
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Table 2 Correlation matrix.
PRO INT STR SATIS AOC SEC TUR
PRO
INT
STR
SATIS
AOC
SEC
TURN
1.000
0.558** 1.000
0.248* 0.322** 1.000
0.452** 0.513** 0.371** 1.000
0.429** 0.356** 0.372** 0.699** 1.000
0.339** 0.311** 0.294** 0.334** 0.393** 1.000
0.289** 0.358** 0.331** 0.428** 0.575** 0.271** 1.000
n = 125. PRO, procedural justice; INT, interactional justice; STR, job stress; SATIS, job satisfaction; AOC, affective commitment; SEC, job insecurity; TURN, intent to turnover. * p < .01. ** p < .001 (one-tailed significance).
Fig. 2. Structural equation model with path coefficients.
justice was positively related to survivors’ job satisfaction and negatively related to their intent to turnover. As predicted in H3, higher job insecurity increased survivors’ job stress, and decreased their affective commitment to the organization. However, job insecurity impacted job satisfaction at only a marginal level (p < .074). Consistent with H4, job stress was inversely related to job satisfaction, suggesting that layoff survivors who experienced greater stress were less satisfied with their jobs. Survivors’ job stress only marginally influenced their affective commitment (p < .075). The control paths between procedural justice and interactional justice, job satisfaction and affective commitment,
and affective commitment and intent to turnover were significant and in the predicted direction. The results of the structural equation model indicated that the theoretical model was well-specified and provided substantial support for the hypotheses. An additional advantage of using structural equation modeling is the ability of the technique to identify paths or relationships contained in the theoretical model that impair model fit, thereby allowing the researcher to determine a best-fit or optimal model. We compared the results of the theoretical model in Fig. 1 to the optimal model. The paths indicated in the model were consistent with the hypotheses and the results were virtually identical to those of the theoretical model. A chi-square difference test indi-
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J.T. Sweeney, J.J. Quirin / Accounting, Organizations and Society 34 (2009) 787–795 Table 3 Structural equation modeling results for the theoretical model. Dependent variable
Independent variable
Directional prediction
PRO SEC
INT PRO INT PRO INT SEC PRO INT STR SEC STR SEC SATIS PRO INT SATIS AOC
+ H1, H2, H1, H2, H3, + H1, + H2, + H4, H3, H4, H3, + H1, H2,
STR
SATIS
AOC
TURN
Path coefficient 0.558 0.241 0.177 0.050 0.231 0.205 0.194 0.308 0.190 0.117 0.099 0.160 0.609 0.043 0.208 0.044 0.547
t-Statistic 7.49 2.40 1.76 0.49 2.28 2.30 2.18 3.43 2.43 1.48 1.46 2.39 8.83 0.38 2.06 0.37 5.26
p-Value 0.001 0.009 0.042 0.316 0.013 0.012 0.017 0.001 0.009 0.074 0.075 0.010 0.001 0.322 0.014 0.346 0.001
n = 125.
cated that the variance accounted for by the optimal model was not significantly different from that attributable to the theoretical model.7 Implications and conclusions At the beginning of the 21st century, accountants faced increasing threats to their job security, including outsourcing and the offshore transfer of administrative functions (Friedman, 2005). For accountants who involuntary lose their job as a result of downsizing, the psychological and economic affects can be severe. For the downsized organization, survival may depend on the commitment and continued employment of those employees who remain. Downsizing, however, breaks the psychological employment contract (Robinson, 1996), potentially creating insecurity and stress in survivors, and often results in increased voluntary turnover (Spreitzer & Mishra, 2002). This study extends previous research on layoff survivors to the domain of accounting. The results of our model largely supported theoretical predictions and confirmed that organizational justice concepts have relevance in understanding survivors’ post-layoff perceptions, psychological states, attitudes, and intentions. Managerial accountants who perceived high levels of procedural and interactional justice after surviving layoffs exhibited less job stress and felt less job insecurity. Furthermore, accountants who felt less stressed and less insecure were, in general, more satisfied with their jobs, more committed to their organization, and had stronger intentions of leaving the organization. These results confirm the importance of procedural justice and interactional justice in minimizing the negative impact of layoffs on survivors There are both theoretical and practical implications of this research. First, procedural and interactional justice each had significant influence on survivors’ psychological
7
For more detailed analysis of the data, please contact the authors.
states and attitudes, but only interactional justice directly impacted their intention to turnover. This result indicates that management can play an active and positive role in influencing survivors’ reactions to a layoff and desire to continue the employment relationship, and is consistent with Brennan and Skarlicki’s (2004) emphasis on the importance of interactional justice. Second, although layoffs are often viewed by employees as an undesirable form of change, the survivors in our sample had both relatively high levels of affective commitment to the organization and high levels of job insecurity. This apparent paradox implies that employees can feel allegiance even in the wake of downsizing and potential threats to their job. Third, the sample in this study survived layoffs attributable to causes external to the organization. It is unclear whether the results of this study would apply when a layoff results from internal factors, such as managements’ decision to offshore an accounting task. The recent growth in outsourcing, both in public accounting and in corporate accounting (Friedman, 2005), provides opportunities for future research. Fourth, our data were collected after a series of layoffs had commenced. Future research on the impact of layoffs may also contribute to the extant knowledge base by longitudinally investigating the cumulative effect of successive workforce reductions on survivor reactions and productivity. While the results of this study are substantially consistent with theoretical predictions, their interpretation is subject to a number of limitations. First, survey studies lack the control of experimental designs and may be exposed to potential biases sometimes associated with self-reporting. Second, problems of omitted and uncontrolled intervening or moderating variables may exist. Third, the measure of survivors’ intent to turnover was based upon self-reported intentions. The extent to which the measure is correlated with actual voluntary turnover is unknown. Finally, this study focused only on accountants employed within a manufacturing organization. Additional research is needed to ascertain the extent of
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