Introduction
Does Job Insecurity cost your company?
The short answer is YES and far more than you may think.
But I am sure you already know that, and as a leader, manager, head of a department, or CEO or even a Chief Exec of an organisation.
You have an understanding that job insecurity can have counter-productive impacts, no matter what the cause of that job insecurity may be.
If job insecurity is a new subject to you, or you are unaware of the possible impacts, then I would suggest you continue reading, even if it is only to get an introduction to a complex subject.
Discussion
For those of you who have followed my blog, you will have seen a diverse set of subjects centred around job insecurity, however, the assignment of costs is a complex subject that I did not wish to cover just yet, but recent events have re-affirmed to me that, some leaders do not always understand the costs that can be associated with an department or an organisation changing.
Employee Job insecurity can have many different causes, from a change in the departmental or organisational leadership, changes in the international or national economy, requiring an organisational response, or even changes to the products or services offered.
Additionally, academic researchers and business commentators have identified technological implementation as one of the central contemporary causes of job insecurity.
However, this blog has not set out to discuss the causes of employee job insecurity, but some of the impact components, and their associated costs.
Does job insecurity cost your company?
I answered YES to the question, however, like all of these things a simple answer can have multiple components to it.
But, before jumping to the end and those all-important costs and where they can be assigned, let’s discuss what could happen when a person or a group of individuals feel that their job or aspects of their job are at risk or being threatened.
Well, research has indicated that individuals go through several different steps or sets of feelings, or even create and maintain perceptions about their ongoing future within their current employment.
And these can have impacts on an organisation. These impacts could include an increased intention to leave, a reduction in organisational commitment, reduced organisational leadership interaction, change resistance or opposition, training resistance, a performance decrease and finally a reduction in organisational intelligence to name a few.
All of these can impact the bottom line, and although it is not always easy to place a fiscal amount on some of these, they will have a cost, and they can be larger than first considered.
But how can these job insecurities cost the organisation?
That question can be answered by examining the job insecurity impact components listed above, and this is not a comprehensive list.
Reduced Organisational Commitment; – Defining and applying an actual fiscal amount to this impact component is a little difficult, but it could be explained by an employee NOT spending that extra 20 minutes at the end of the day completing an urgent report, or resolving an issue, or even answering that important customer or internal email query over the weekend.
Not a great issue you may think, but what could happen if that report was not finished, or that issue was not resolved, could there be a delay of information to a customer, a loss of a sale, an error in the contract, or an internal decision made on incorrect or missing information, or even a computer system that was not fixed?
It could be considered that this is the time the employee “gives” to the organisation, or their commitment to making sure that their work is completed on time, and accurately.
Reduced Organisational Leadership Interaction; – This like the reduced organisational commitment, the definitions and application of fiscal values could be difficult to assign. However, this can be best described as the level of interaction, and the quality of that interaction between line management and the employee.
Where the level of communication is low, the line management team may not know what the employee is achieving. The line management team may receive poor quality, inaccurate, or erratic information, which could lead to issues.
The quality of the interaction could also include the willingness of an employee to complete tasks assigned to them by the line management team. This reduced interaction could also impair the quality of the tasks completed by the employee.
Where, information is provided late, or not at all, or where tasks are not completed or are completed late, these could have costs assigned to them, however, this as has been suggested could be difficult.
Resistance or Opposition to Change; – We all have levels of resistance to change. From preferring the way a mobile phone app was before the upgrade, or the differences between the old and new Mac or Microsoft Operating Systems.
This resistance within the workplace could take the form of an employee continuing to use an outdated process or technological solution.
Like many of the other job insecurity impact components, the assignment of a cost could be considered as difficult, however, the impacts to the organisation could be identified as missing or inadequate information or the delay or non-completion of tasks.
The fiscal cost cannot always be assigned to these impacts, however, they could affect the organisation’s profit and loss, as has been suggested in the previous component.
Training Resistance; – Training comes in many forms, It may be the purchased course with a certificate at the end, the ad hoc online short course, or the training one employee receives from another, enabling the employee to use a process or an application, and all the variations in between.
However, academic research has suggested that an employee who has the perception of job insecurity is less likely to engage with any training provided and will have a lower information assimilation rate.
Like many of the other impact components, the assignment of fiscal costs could be difficult, apart from the time and resources that could be considered as wasted.
Performance Decrease; – This could be considered to be one of the most obvious of the job insecurity impact component outcomes. When the employee loses interest in the job they have, the volume and the quality of the information provided and the tasks performed will be reduced.
Turnover Intentions; – Also known as intentions to resign. This like organisational intelligence could be observed as the culmination of many of the previous states of job insecurity.
However, although the intention could be observed as having an impact on the organisation, it should be considered that this intention to leave, is the step before the employee resigns.
Which will have impacts on the organisation, to which costs can be assigned too.
Organisational Intelligence; – This is the most unpredictable of all the possible effects of job security.
But what is Organisational intelligence? It could be described as the knowledge acquired by all of the employees within an organisation, how and why the organisation works in the way it does, why specific processes have been instigated, why specific pieces of information are required at a particular point, how best to deal, with a customer, and what issues can delay or stop specific processes or decisions. It should not be forgotten that organisational intelligence also includes the employees’ own skills and experiences.
This collective intelligence could be thought of as the central knowledge base of the organisation and enables an organisation to operate effectively and efficiently, and when some of that knowledge is removed this will be impacted.
However, two further job insecurity impact component costs should be considered.
The first cost is replacing an employee, and this can be a costly and well-documented process.
The time and resources required to publish an advert for a replacement, collate and sort the responses and provide them to the hiring team. The time and resources required by the line management team to interview and select the replacement employee, and the time and resources required by assorted admin teams to complete the required tasks that would enable the new employee to complete their job.
All of these can be accounted for and would be considered normal organisational and department operations, however, these costs could be avoided if job insecurity was to be addressed and where possible mitigated.
The second and final point for consideration, and it is one that you may not have contemplated, is the damage that any of the above job insecurity impact components could have on organisational reputation.
Organisations guard with great care their reputation both towards current and future customers as well as the general public at large.
This can be damaged directly and indirectly by an employee who feels their job is under threat, either by providing information that should not be released, or by the employee not attending to a customer or line management request, as required
So to conclude
So, Does Job Insecurity cost your company?
As has been said before it does.
But for many of the job insecurity impact components discussed, the assignment of an actual cost may be difficult, where for example a task or sets of tasks are not completed for a customer, or information that is required for an internal decision is late, not provided, or is of poor quality
However, it should be noted that just because costs cannot always be assigned to a specific job insecurity impact component, they could impact the profit and loss.
Losing an employee because the turnover intention was not addressed will impact organisational intelligence, which could mean the loss of a client or a delayed internal or external decision.
Reduced Organisational Commitment, Performance Decrease, Resistance or Opposition to Change, and Reduced Organisational Leadership Interaction could affect the organisation’s reputation.
So, as a manager or leader, who fails to address job insecurity, especially when new technological systems are being implemented, the costs may not be just that of the technology, or the training, but it could be a reduction in your profits, organisational intelligence or reputation.
So to answer the question, does job insecurity cost your company money?
It can and if not addressed more than just the company profit or loss, in the short term.
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