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Cost-cutting actions, employment relations and workplace grievances: Lessons from the 2008 financial crisis

Ogbonnaya, Chidiebere, Dhir, Amandeep, Maxwell-Cole, Alexander, Gorny, Tomasz (2022) Cost-cutting actions, employment relations and workplace grievances: Lessons from the 2008 financial crisis. Journal of Business Research, . ISSN 0148-2963. (Access to this publication is currently restricted. You may be able to access a copy if URLs are provided) (KAR id:95998)

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Periods of economic recession are typically accompanied by the use of cost-cutting actions, such as wage cuts or freezes, increased workloads and reduced training expenditures. While such actions are expected to boost performance, at least in the short-term, their effects on employee attitudes and behaviours at work have been the subject of much research. In this study, we examine how management's use of cost-cutting actions could have a detrimental impact on two aspects of the employment relations climate—the quality of employee–management relations and the level of employees’ trust in management; further, we investigate how these relationships might lead to an increase in employee complaints against their organisations. Using multilevel data from 21,981 employees in 1,923 workplaces, we show that the use of cost-cutting actions violates the psychological contract, which, in turn, contributes to strained relations between employees and management. However, in workplaces where employees are actively involved in decision-making, cost-cutting actions are less likely to have a negative impact. We discuss the theoretical and practical implications of our study using psychological contract theory.

Item Type: Article
Uncontrolled keywords: Cost-cutting actions; economic recession; employment relations climate; trust perceptions; workplace grievances
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Divisions > Kent Business School - Division > Department of Leadership and Management
Depositing User: Chidi Ogbonnaya
Date Deposited: 01 Aug 2022 13:52 UTC
Last Modified: 04 Aug 2022 14:02 UTC
Resource URI: (The current URI for this page, for reference purposes)

University of Kent Author Information

Ogbonnaya, Chidiebere.

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Maxwell-Cole, Alexander.

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