The term “job security” is about to be thrown around a lot. With all the economic troubles going on right now, it’s likely that increasing numbers of people will feel that their job is on the line. Just look at Meta, who laid off over 11,000 employees this week alone. For HR teams everywhere, it’s vital to handle this sensitive issue correctly, for the sake of both the employees and the organization.
What Is Job Security?
There are two types of job security – actual and psychological.
As an example, actual job security exists for tenured university professors. This type of job security was created so that professors could pursue knowledge for its own sake. (For those who think that’s unfair, it’s interesting to note that academic tenure seems to be on its way out.)
There are other situations where employees enjoy near-actual job security, for instance:
- Having a vital position in the company. Obviously, senior managers who are doing a good job will be among the last to be fired.
- Government regulations that prevent layoffs of certain types. In France, an employer must prove that a worker is incompetent, and has been given every opportunity to improve through training, before firing them.
- Unions. There are some industries and regions where unions can prevent layoffs, even when the company can’t afford to pay everyone.
But for most of us, the more common job security definition is a sense of knowing that you won’t be fired. The employee believes that they are doing work that is essential for the company, and even if others are laid off, they will remain.
What about people who don’t have job security? There are many reasons why a person can suspect that their job is about to disappear. Some of these reasons are within their influence, and others are not:
- Economic conditions
- Lack of business success or growth
- At-will employment contracts
- Individual performance, education, experience, and skills
- Being passed over for promotion
- Department closure
- Mergers, acquisitions, and relocations
Job Security vs. Job Stability
Job security describes how an employee feels about the chances that their current job will keep going. It is a short-term focus, and does not take into consideration what might happen to the employee five or ten years down the road.
By comparison, job stability relates to how long an employee will stay in the same job without changes. Job stability was something that previous generations could expect, exemplified by that old cliché about getting a gold watch after spending 40 years with the same company.
This does not seem to be the case anymore. Unlike in the past, most companies fill most of their positions through external hiring. If the average employee wants to progress, they need to move, and that’s the end of their stability.
In short, a stable job is secure, but not every secure job is stable.
Why Is Job Security Important?
Encouraging a sense of job security among as many workers as possible is crucial. This is not just a benefit for employees. An organization where workers feel confident in their future comes with many more advantages than one where employees have no idea what might happen tomorrow.
Most employees who think that they are about to lose their job will also lose interest in what they are doing, and will probably start looking for something new. The saying “it’s easier to look for a job when you have a job” comes back to haunt managers and HR in this situation. According to Gallup, employees who are insecure about the stability of their job show an average engagement decrease of 37%.
Don’t forget that this is on top of the poor engagement rates that are being seen across the board. In the era of “Act Your Wage”, many employees are already dissatisfied with their conditions and showing high levels of disengagement – and this is without taking job security factors into account.
On the other hand, promoting job security has a significant impact on engagement. According to the NCBI, more than 85% of job-secure workers are engaged. Meanwhile, for those with an uncertain future, all is not lost, as managers can play an important role in reducing the effect of job insecurity. Managerial support for job-insecure workers increases the chance that these employees are engaged by 13%.
Increases Productivity and Retention
Having engaged workers is not the same as having productive workers. Engagement can be defined as the “emotional connection between workers and their job, coworkers, and organization.” Employees might love your company, but the stress of layoffs can wreak havoc on their productivity.
Job insecurity is contagious. Whenever there are layoffs, or even suspicions about them, the first question on everybody’s mind is “am I next?” This can result in:
- Time lost due to gossiping and managers needing to calm everyone down
- Low well-being in the form of stress that causes lack of concentration, sleep deprivation, and frayed tempers
- Distrust of management based on the assumption that the people lower in the hierarchy will be the first to go
If layoffs actually happen, then even the most engaged workers might have a tough time of it. Downsizing affects morale and organizational culture. On a material level, it can take a while to organize replacements for the work that former employees used to do. At least in the short term, remaining workers will need to do more than their usual share and take on additional responsibilities.
But when job security is instilled in your people, productivity will benefit. For example, employees who believe that they are safe for now will participate in career development opportunities. Such workers will see that, by investing their effort today, they will still be employed tomorrow so as to use their new skills.
It’s a similar story with retention. A Gallup study found that companies with high engagement rates, but poor well-being, had a turnover rate that was 20% below the average. However, when groups enjoyed high engagement and high well-being, they had 30% less turnover than average.
When companies start to look at firing people, it can have unintended consequences. Ironically, it’s often the most talented workers who act first when layoffs are in the air. With great skills to offer, your best people could find it easiest to arrange for new work.
As the worry spreads, additional employees will start looking, which can result in a sudden upsurge in voluntary quits.
Replacing those workers will be more difficult than expected. If word gets out that your company is examining layoffs, or is having trouble staying in business, then people will be reluctant to join you. Nobody wants to get hired by an organization, tell all of their prospects that they are off the market, and then be back on the streets a short while later.
How to Handle Job Security Issues
Let’s face it, some issues are beyond the control of HR, management, and even the entire organization. So it’s the task of HR and managers to minimize the effect of job security challenges. Here are just some of the options:
Rumors can be more damaging than the truth. When there is no clear idea of what’s actually going on in a company, employees will assume the worst.
A good manager will meet frequently with employees. If they mention possible layoffs, it’s time to act. Explain the situation to upper management and encourage them to make a statement. Tell employees about your take on the situation, and invite them to discuss their concerns in a controlled environment, such as a forum, to keep rumors to a minimum. Manage your worker’s expectations by staying on top of the big picture and keeping them updated.
Continue to Promote Internal Recruitment
Remember that job security is a sense of knowing that you won’t be fired. One of the “hints” that a worker might be cut is that they are passed over for promotion. In these situations, it is often the case that a worker who has been with the company for a long time has a relatively high salary compared to peers. If they are not going up, then management might want them out, because they are expensive. But why have they been refused a promotion? It could be that the above-mentioned preference for external hiring is to blame.
For many reasons, using existing workers to fill openings is a good idea. Avoiding job security concerns by enabling employees to climb the corporate ladder is yet another one.
Act as an Advocate for Rationality
It has to be said – sometimes, leaders panic. A common reaction in this situation is to get out the chopping block.
But one mistake that companies make during times of economic pressure is that they let too many people go. The loss of skilled workers makes it even more difficult to function in an already difficult situation.
It’s called dumbsizing, and there are plenty of examples of it. One is Circuit City, which fired many of its highest paid employees, who were probably the best in the company at their jobs. As a result, Circuit City became less competitive, lost market share, and soon went bankrupt.
HR can reduce the number of layoffs by mentioning such examples. But they can also ask essential questions such as, “how can we survive without our best people?” The catch here is to make sure that employees are the best that they can be, and that relies on skills.
Provide Learning and Development Opportunities
If there’s such a thing as a “cure-all” for job security, it’s L&D. For various reasons, building the highest possible level of skills within a company often creates a sense of job security. Plus, in the worst situations, skills give your employees a better future, even if that will be outside your organization.
Every company faces its own set of circumstances. But one major reason for loss of job security is the effect of competition. Using L&D today can have an immediate effect on productivity and make the company more competitive.
There are even particular types of skills that will enable your company to weather the storm with a minimum of layoffs. Change management skills allow organizations to take drastic actions in the most rapid and effective way possible. In addition, it’s often adaptive leaders who have the ability to make such changes. Their effect will be enhanced if more employees are also trained in adaptive skills.
Finally, employees who are actually terminated will have the confidence, and the capability, to quickly find new jobs – if they have the right skills. Providing these opportunities is the result of HR/L&D activities, including career management, keeping track of the market’s most useful skills, and continuous professional development.
Feel More Secure in Your Job with GrowthSpace
To make the best of a bad situation means protecting both your organization and your employees. Perhaps you can’t control the economy, but you can increase the resilience of your people, and that means skills. With GrowthSpace, companies deliver exactly the courses that are needed to enhance competitiveness and prepare employees for the future.