The study examined managerial perceptions of job security in a private sector industrial organization which had recently made major attempts to downsize its workforce through the introduction of the voluntary retirement scheme (VRS). Research in this direction has uncovered some common patterns of change in the organizational work environment during major upheavals caused by major organizational events such as downsizing. Downsizing refers to the planned elimination of positions or jobs with an intent to cut costs and to improve organizational perfonnance (Kets de Vries & Balazs, 1997, Kozlowski, Chao, Smith & Hedlund, 1993). Companies feel compelled to downsize because being “lean and mean” is believed to strengthen competitiveness (Leung & Chang, 2002) with global benchmarking and revolutionary transformations in information and communication technologies being other reasons. Individuals employed by a downsizing organization could be either victims (those who are separated from the completed), or implementers (those involved in executing the downsizing program in the organization). Western and Indian literature point out that victims of downsizing experience complex affective reactions akin to the loss associated with bereavement. A sense of meaninglessness and desperation, loss of self-esteem, depression and reduced sense of mastery, which may culminate in violence and self destruction, are commonly reported (Barse, 2001; Greenhalgh & Rosenblatt, 1984; Noer, 1993; Noronha & Sharma, 1999). Financial losses and an impoverished quality of life are frequently observed outcomes, compounded by difficulties in getting reemployed either because of age, lack of skills or an over saturated labor market.

During such periods organizations also appear to undergo a period of deterioration of communication at many levels even though communication appears to be particularly important at these times. Downsizing organization appears to be marked by high levels of uncertainty and chaos. Hopkins and Hopkins (1999) point out that considering the ethics of downsizing, while top management has a moral obligation to act in the best interests of the firm, they also have a legal obligation not to violate the rights of employees. To achieve the latter end, the decision to downsize should be communicated in a timely and appropriate manner with the provision of complete information, that is, two-way and honest communication must be practiced at all times. Employees must also be informed of the long term goals of the organization and how downsizing fits in with these objectives (Appelbaum & Donia, 2001). Downsizing may not be limited to workforce reduction through layoffs but may also be resorted to by the introduction of early retirement programs (Applebaum, Patton & Shapiro, 2003). When used as a downsizing tool, these programmes offer incentives for a limited time to a select group of employees to achieve immediate short run savings in payroll related costs.

A critical factor related to downsizing by organizations is the perceived threat to job security by organizational members. Meltz (1989) defines job security broadly as “an individual remains employed with the same organization with no diminution of seniority, pay, pension, rights etc”. Similarly Herzberg (1968) defines job security as ‘the extent to which an organization provides stable employment for employees’. Greenhaulgh and Rosenblatt (1984) defined job insecurity as “a perceived powerlessness to maintain desired continuity in a threatened job situation”. They further maintained that job security is based on the individual’s perceptions and interpretations of the immediate work environment. This implies that subjectively experienced threats are derived from objective threats by means of the individual’s perceptual and cognitive process. Job security has, thus been variously described as one’s expectations about continuity in a job situation, an overall concern about the future existence of the job, an employee’s perception of a potential threat to continuity in his or her current job, a discrepancy between the level of security a person experiences and the level he or she might prefer, and the subjectively experienced anticipation of a fundamental and involuntary event.

Job security is commonly viewed as having both direct and indirect effect on motivation, although it is unclear whether these effects are positive or negative. It is believed to reduce performance by directly reducing employee’s motivation, as well as having similar indirect effects as it contributes to increased helplessness and powerlessness which reduce motivation. High job security generates complacency that reduces motivation to work hard and achieve excellence. Mohr (2000) discussed four different states of job security, namely, a) job security as a state of public awareness, which involves a low degree of unemployment in society, b) job security at the company level which refers to stable and secure conditions in the organization, c) acute job security: involving the concrete subjective experiencing of a threat to employment and d) anticipation of job loss which applies to a situation where layoffs have already begun to be carried out in the organization in which the individual is employed. Job security can therefore be either experienced at a personal level or attributed externally, such as in those situations where the researchers define the population under investigation as being uncertain of how their future employment will progress (Ferrie, 2001).

De Witte and Naswal (2003) found that, among those experiencing a high degree of job insecurity, it was the permanent rather than the temporary employees who reported lower levels of both job satisfaction and organizational commitment in comparison with the temporary employees. The importance of job security stems from the fact that it is crucial for influencing work related outcomes. For instance, job security is an important determinant for employee health (Kuhnert, Sims & Lahey, 1989), the physical and psychological well-being of employees (Burke, 1991, Kuhnert & Palmer 1991), employee turnover, employee retention (Bhuian & Islam 1996; Iversion & Roy, 1994), job satisfaction (Davy, Kinicki & Scheck, 1991; Lim 1996) and organizational commitment (Morris, Lydka, & O’Creevy, 1993).

Because of its significance, job security has attracted a great deal of research interest in recent years. It should be mentioned that in the Indian context job security has been affected by the introduction of the voluntary retirement scheme wherein the employee is offered voluntary retirement from his service before his retirement date.

If individuals feel their needs threatened by a perceived insecure employment situation, they are also experiencing a threat to the vital economic, social and personal aspects of their lives (De Witte, 1999). The individual’s evaluation of work is also shaped by a strong desire for stability (Schabracq & Cooper, 2000), and losing the job would mean losing this structure and stability as well. Individuals who feel that these important features of life are threatened, and are uncertain as to how to protect them, will be frustrated and will experience stress. Social support has been named as a possible coping resource for reducing the perceptions of stress associated with job insecurity. Those who are able to utilize support from others have been found to report lower levels of job insecurity (Armstrong- Stassen, 1993). Social support may originate from a variety of sources.

A variant of social support in the organizational context may be found in the concept of perceived organizational support (Eisenberger, Huntington, Hutchison, and Sowa, 1986) which explains the development of employee commitment to an organization. Employees who experience a strong level of perceived organizational support theoretically feel the need to reciprocate favorable organizational treatment with attitudes and behaviors that in turn benefit the organization (Eisenberger et al., 1986). In support of this social exchange perspective, research has revealed that perceived organizational support is positively related to job attendance and measures of job performance (Eisenberger, Fasolo, & Davis- LaMastro, 1990), the tendency to help coworkers (Shore & Wayne, 1993), the tendency to offer constructive suggestions for organizational improvement, and affective organizational commitment (Eisenberger et al., 1990). Overall, it appears that employees with higher levels of perceived organizational support are likely to be more committed and possibly more willing to engage in extra role or “organizational citizenship” behaviors (Organ, 1988) than employees who feel that the organization does not value them as highly.

Additionally, some work also suggests that perceived organizational support may be beneficial to the individual as well as to the organization. On the basis of perceived organizational support, employees infer the organization’s commitment to them and readiness to reward greater effort. Perceived organizational support serves to increase the expectation of material resources (e.g. pay, fringe, benefits) and symbolic resources (e.g. praise, approval) resulting from increased work effort. Perceived organizational support was reported to be negatively related to absenteeism (Eisenberger etal, 1986) and turnover intentions but was positively related to perceived sufficiency of pay and to perceived sufficiency of family oriented policies and actions (Guzzo, Noonan and Elron, 1994), high quality employee supervisor relationships, favorable developmental training experiences and promotions.

Consequences of lack of perceived organizational support include withdrawal behavior which refers to employee’s lessening of active participation in the organization. The relationship of perceived organizational support with behavioral intentions to leave has been assessed (Allen, Shore & Griffeth, 1999) as have actual withdrawal behaviors such as tardiness, absenteeism and voluntary turnover. Retention of organizational membership, high attendance and punctuality provide publicly identifiable ways for employees to reciprocate perceived organizational support.

The above review highlights the significance of members’ perception of organizational support for member loyalty and intention to stay in an organization which has resorted to downsizing and consequently for perceptions of job security among the surviving members. The present study was therefore conducted with the objective of investigating the extent to which perceived organizational support by members and their demographic characteristics such as salary, duration of service and promotions are likely to influence perceptions of job security in an organization which has introduced the scheme for voluntary retirement (VRS). It can be postulated that anticipation of job loss might have adverse implications on perceived job security among the survivors. Specifically, it was hypothesized that in such an organization:

Sample: The study was conducted on a sample of 125 managerial personnel of a manufacturing private sector organization, namely, Century Mills, located in the state of Maharashtra, which has resorted to intensive downsizing through the introduction of the voluntary retirement scheme (VRS).

Measures: The following scales were utilized for the study:

Procedure: Data were collected through administration of questionnaires. The questionnaires were administered on the premises of the organizations in such a way as to preserve the anonymity of participants. Of the 200 questionnaires distributed, 125 were collected resulting in a 62.5 percent response rate.

The responses of the participants were statistically analyzed to test the hypothesized relationships by the application of correlation and regression analysis. Means of variables appear in Table

1. Among the demographic variables, the mean value for salary was 1.46 which indicated that the average salary of employees was approximately Rs. 20,000. Mean value for length of service was 2.19 which showed that average length of service ranged between 5-10 years and mean value for promotions received was 1.83 which indicated that every employee had received a minimum of one promotion. The mean value for factor 1, that is, support for developmental needs was 17.09, the mean for factor 2, that is, exchange-relationship was 10.09, while the mean value for factor 3, that is, performance related support was 19.67.

The correlations between the factors of perceived organizational support and job security appear in Table 1. There was a significantly positive correlation between support for developmental needs and job security (r=. 13). The correlation of factor 2 (exchange relationship) and factor 3 (performance related support) with job security were also significantly positive (r=.17 and.32 respectively). Stepwise regression analysis (Table 3) of the dimensions of perceived organizational support with perceived job security did not show expected trends. Out of the three dimensions, only performance-related support significantly predicted job security.

The correlations between the demographic characteristics of managers and their perceived job security also appear in Table 1. Among the demographic variables, the salary of respondents was positively correlated with job security (r=.24). However, length of service had a significantly negative correlation (n=-.18) with job security. There was also an insignificant negative correlation between number of promotions obtained and job security (r=-.05), which did not lend support to the hypothesized relationships. Stepwise regression analysis (Table 2) of demographic variables with job security showed that salary emerged as a significant predictor of job security with abeta of.25 (p<.01). However, duration of service was a negative predictor of perceived job security with a beta of -. 18 (p<.05) indicating that in an organization where downsizing measures are being resorted to, members are not likely to experience high levels of job security even with an increase in their length of service in the organization.

The present study was conducted with the purpose of examining the patterns of relationships between demographic characteristics, perceived organizational support and job security among managerial personnel in a firm which had resorted to downsizing through the introduction of voluntary retirement scheme. It was hypothesized that dimensions of perceived organizational support by managerial members and their demographic characteristics in terms of age, salary, duration of service and promotions received, would be positively related with their perceptions of job security in such a firm.

The correlation between factors of perceived organizational support and job security demonstrated a significantly positive relation between support for developmental needs, support in an exchange relationship and performance related support and job security. But regression analysis of the dimensions of perceived organizational support with perceived job security indicated weak support for the hypothesized patterns of relationships. The single dimension of perceived organizational support that significantly predicted job security was ‘performance-related support’. The results thus demonstrated that perceived organizational support with regard to developmental needs and exchange relationships cannot enhance perceptions of job security among members who are uncertain about their stay in an organization in which downsizing measures are being implemented.

Among the demographic variables, the salary of participants was significantly related with job security. However, length of service had a negatively significant relationship with job security. Managerial employees are not likely to feel more secure about their job. In this context, Hellgren, Sverke and Issakson (1999) argued that while carrying out such an analysis it would be meaningful to make a distinction between at least two different aspects of job security; quantitative and qualitative security. Quantitative job security is similar to the global conceptualizations of the construct. Qualitative job security pertains to perceptions of potential loss of quality in the employment relationship, such as deterioration of working conditions, demotion, lack of career opportunities, decreasing salary development and concerns about person -organization fit in the future. Further, Nardone, Veum, and Yates (1997) have argued that one issue that arises when examining job duration is the quality of the job tenure data in the current population survey (CPS). Information on how long individuals have worked continuously for their current employer is available in periodic CPS supplements. Yet this information often is viewed as being relatively crude, given that durations are measured in years and the frequency distributions tend to exhibit spikes at years that are multiples of 5. Hence, the information may contain substantial recall or rounding errors.

Evidence from other U.S. data sources also indicates that data on job tenure are often problematic. In particular, in the Panel Study of Income Dynamics, which interviews the same people over time, responses to tenure questions were often inconsistent with calendar time (Brown & Light, 1992). For example, in a particular year an individual might claim to have been working for an employer for 3 years, but in the subsequent year the same person would claim to have been working with the same employer for 6 years. Inconsistent responses such as these suggest that data on tenure are often unreliable, even when collected longitudinally. The results in our study also demonstrate a negative relationship between number of promotions obtained and job security which did not lend support to the hypothesized relationships.

Stepwise regression analysis of demographic variables with job security showed that ‘salary’ emerged as a significant predictor of job security. However, duration of service was a negative predictor of perceived job security which again indicates that in an organization where downsizing measures are being resorted to, members are not likely to experience high levels of job security even with an increase in their length of service in the organization since the future of their job might seem uncertain.

Findings, thus, indicate that the perception of organizational support conditions for members which are beneficial for organizations that are functioning normally, may not serve the interest of members once the organization creates uncertainty in the minds of its members through attempts to downsize. Perceptions of organizational support should, in effect, assure the survivors of a downsizing program that the organization is committed to them. But the reverse might be the case. Encouraging managers to opt for voluntary retirement plans may also change the nature of the psychological contract for the survivors (Beaumont & Harris, 2002). Thus, although downsizing may yield immediate reductions in direct labor costs, the strategic HRM perspective suggests that it may also undermine longer-term competitive advantage (Chadwick, Hunter & Waltson, 2004). They have suggested that focusing on cost reductions can weaken subsequent performance by undermining discretionary effort, eroding skill bases, and weakening the organizational structures that enhance productivity. Employee reactions to downsizing can include reduced discretionary effort through diminished ‘organizational citizenship behavior’ (Bies, Martin, and Brockner, 1993) and other negative responses to perceived threats posed by layoffs (Mishra and Spreitzer, 1998). Lowered commitment (Davy, Kinicki, and Scheck, 1991), withdrawal from the organization (Davy et al., 1991; Brockner, 1990) and from the job (Brockner, 1990) may lead to reduced effort and turnover. Fisher and White (2000) and Shah (2000) show that layoffs can disrupt workplace relationship networks that are conducive to organizational learning and improvement over time. Cappelli (2000) analyzing a large sample of U.S. establishments, finds two effects consistent with this framework. First, downsizing initially reduces labor costs, resulting, on average, in direct savings. Second, downsizing is followed, on average, by reductions in establishment-level productivity over time, such that the net effect of job cuts on financial performance is neutral to negative for the average establishment.

In conclusion, it should be reiterated that successful performance following downsizing requires suitable HRM practices that continue to promote discretionary efforts of employees, that retain valuable human capital, and that reconstruct valuable organizational structures, in short, practices which enhance perceptions of organizational support among surviving members. Managers are also likely to be uncertain about the relationship between specific choices in HRM practices that accompany downsizing and about the net costs and benefits of those choices. There may even be organizational dysfunctions associated with managerial agency, should the managers that implement downsizing decisions not be the same as those who run the organization subsequent to the effects of those decisions, or should managerial contracts reward immediate successes in reducing costs disproportionate to longer-term achievements in preserving productivity (Shleifer & Summers, 1988). In fact this might lead to a greater number of members leaving the organization voluntarily. Hence organizations would be well advised to develop human resource practices that reassure the surviving members of the continuity of their job security if they wish to retain them.

* p <.05, ** p <.01

*p<.05, **P<.01

*p<.05, **P<.01

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