Organizational Behaviour -1 Assignment

Akhil Dattana 2012PGP022 Section C

Coping with Economic stress

Choice of topic: I chose this topic because it reflects one of the most important aspects of jobs today. Economic stress is an everyday affair in coping with the job insecurity these days or in context of self employment. Analysing and evaluating how to handle this is important because in case of unemployed people who handle it well, it may either motivate them to seek help and search for reemployment or turn unemployed workers into discouraged workers. In the recent situation of a global meltdown, I think this is one of the key concerns which can be instrumental in deciding how an individual copes up with the competitive and the volatile market. Library Research: Research has been done to study the antecedents and outcome of Job Insecurity (JI) .Testing job insecurity (JI) process has been done through cognitive JI and affective JI. More the levels of cognitive JI, more is the affective reaction (affective JI). This affective reaction influences individual psychological and behavioural outcomes. Research on three large Chinese organizations show that employee involvement decreases cognitive JI perceptions. This reduction then leads to lower affective JI. JI has negative impact on employee psychological well-being but initially a positive on supervisor-rated job as the employee strives more to preserve his job. The effect of cognitive JI on employee outcomes is partially through affective JI. It has been found that Cognitive JI directly impacts psychological well-being but less impacts the job performance. Research has focused on factors, such as locus of control and negative affectivity which proclaim that JI perceptions result from the objective conditions in which people work; macro-level causes such as national unemployment rates or organizational change, if not more important than, but still individual-level are important in context of JI. Therefore, factors such as organizational communication and employee involvement play a key role through sharing information and affect decision-making processes and reduce perceived level of unpredictability and uncontrollability and thereby help in minimizing JI perceptions. Reward systems such as compensation, promotions, and recognition to individual, group, and job organizational performance are four attributes which constitute a set of measures that an organization can take to effect of employee involvement. As JI affects employee outcomes negatively, managements challenge is to identify the problems and find a viable solution. Findings suggest that employers must pay attention to organizational practices, such as employee involvement, that can help minimize JI perceptions. These practices lower perceptions of JI, by increasing perceptions of personal control. On the contrary employees with emotional dissonance eventually begin to engage in negative employee outcomes. (1)

Another study relates Perceived External Employability (PEE) as a personal resource in relation to job insecurity and exhaustion. The findings so far show that PEE provides a buffer against the negative consequences associated with JI. The consequence is that the relationship between job insecurity and strain is relatively weak among workers who find themselves as highly employable but relatively strong among workers who perceive themselves as less employable. For a worker to be confident about his PEE investments such as skill development and training play a key role. Highly employable workers can leverage the benefits of such investments in situation such as the present state of economic turmoil. The proles of highly employable workers are in demand in the job market. Employers would want to tie these workers to their organization and keep them away from competitors by providing them with relatively secure jobs by applying the Goal Setting Theory. Particularly in a volatile labour market as we have in the current scenario, job security may be seen as rewarding. So we can say that an investment in honing our skills benefits us and increase the PEE which in turn will reduce the perceived JI. PEE also through its negative correlation with job insecurity, also reduce strain. So to remain stress free and a versatile corporate fit it is essential to increase our PEE so that any volatility in the market does not much influence our professional or personal well being. Thus it is essential to invest in human capital and improving the career competencies. (2) Yet another study to focus on is the effect of the turbulent conditions on entrepreneurs. Entrepreneurship is one of the preferred options people are resorting to these days. Entrepreneurs have the highest vulnerability when it comes to a situation of economic instability. It has been found that social ties smoothens the relation between economic stress and the withdrawal intentions of entrepreneurs. Alternately, among entrepreneurs with less contact with social ties, the correlation between stress and withdrawal intentions is high. With greater economic stress associated with greater intentions to withdrawthe relation improves as contact with social ties increases. Thus social ties play a key role in allaying the negative intentions of withdrawal of an entrepreneur .It may be that in times of increased economic stress, having contact with business related social ties not only lessens the effects of stress on withdrawal intentions but even causes a sort of positive unexpected reaction, making entrepreneurs to use the trust provided by social ties to work even harder. This positive reaction occurs under times of stress or pressure, in which an individual responds with unexpected effort or performance. Perhaps motivated entrepreneurs under economic stress, who have more contact with business related social ties, experience stress as a challenge rather than a hindrance and exhibit this reactance response. Among those with less contact with social ties, greater the economic stress more is the tendency to be highly depressed affect, which in turn results in higher intentions to withdraw from entrepreneurship. Contact with social ties can thus play an instrumental role in enabling entrepreneurs to respond positively with business-related ties and hence reduce

the likelihood that they get into an activated negative state of emotions such as helplessness and frustration and subsequently a tendency of withdrawal.(3) Another study focuses upon yet another situation which is highly prevalent namely the problem of high attrition in the current scenario. The study examined the inuence of psychological capital on job search among displaced employees. It was found that positive factors such as self-efficacy, hope, optimism, and resilience were positively related with displaced employees level of perceived employability .It has been found that individuals perception of how employable they are has remarkable consequences on their abilities to adapt to employment changes, their job search patterns, and their overall well being. Individuals who perceive themselves as highly employable are better able to adapt to job movements and engage in more motivated and creative job search. Thus a high PEE helps not only in retention of a job but also in subsequent motivation towards job search in case of a loss of job. A positive state of mind will help in developing a tendency of resilience among the jobless people and hence subsequently influence the job search. Thus psychological capital, a positive psychological state, wills positively inuence how displaced employees handle their employability after job loss. Displaced employees with high levels of psychological capital tend to perceive themselves more employable than those with lower levels. Despite being unemployed, individuals with high psychological capital are condent about their abilities and competencies, remain optimistic about their future, and relentlessly involve in job search, and are able to find multiple ways to overcome obstacles during job search. Their positive frame of mind motivates them to continuously seek opportunities rather than other individuals who get into a negative state of mind blaming and self pitying. We can analyze these two different states using the Circumplex Model of Affect. One practical implication of these ndings is that not only is there a need to increase human capital for displaced employees but that there is also a need to manage their psychological capital. Though it may not be possible to develop intellectual capital but it is possible that psychological capital can be developed through training and applications of motivational theories such as goal setting theory in workplaces. Thus apart from conducting traditional workshops such as resume workshops and job placements, career counsellors and employment should design motivational programs targeted at increasing the psychological capital of displaced employees. This can have a activated positive effect on the displaced employees and will help them to stay motivated and active in their job search.(4) All these studies modestly cover the aspects of the current economic conditions and define strategies for all organizations to deal with the situation of economic stress in a impactful manner. It also shows how important it is as an individual to keep our PEE high by continuous up gradation of skills because the market is volatile and the rapid pace of automation also demands one to be continuously working hard. Dealing with unemployment is yet another important aspect of the corporate world today as one is highly vulnerable so it is important to have a high psychological capital and motivation. Finally the study on entrepreneurs also provides us with important factors in which they can deal with economic stress and how essential is social contacts to keep them going. And since an increasing

number of people are choosing to go for start ups it becomes more and more essential to consider the factors discussed above.

How does it impact me as a manager? The studies above show that development of psychological capital can help the manager in retaining his team .Also emphasis as a manager should be on increasing employee involvement. Also as we go into our jobs it should be our constant endeavour to increase our PEE through ways discussed above. And as a manager of some start up one should have good social contacts to pass through the turbulent conditions. That can give us motivation to work even harder and avoid withdrawal.

Any other comment ? I think because of the huge completion in the job market and the uncertainty, and the factors such as inflation, International Politics and country norms and regulations , economic stress is the aspect of the modern world. There is hardly anyone who can escape this. To cope with it requires high involvement of all the employees in an organization .Also due to the high attrition rate it becomes more and more essential to handle economic stress well. The need of the hour as a manger is to motivate and involve employees and as an employee to improve ones PEE and have a good social life. Furthermore, according to me the importance of social contacts should not be neglected in not only the context of entrepreneurship but also in case of job environment.

References: 1. Guo-hua Huang, Xiongying Niu, Cynthia Lee and Susan J. Ashford, Differentiating cognitive and affective job insecurity: Antecedents and outcomes, Journal of Organizational Behavior .Vol 33, pp.752769 (2012) 2. Nele de Cuyper, Anne Makikangas, Ulla Kinnunen Saija Mauno and Hans de Witte, Cross-lagged associations between perceived external employability, job insecurity, and exhaustion: Testing gain and loss spirals according to the Conservation of Resources Theory, Journal of Organizational Behavior, Vol.33, pp.770788 (2012) 3. Jeffrey M. Pollack, Eric m. Vanepps and Andrew F. Hayes, The moderating role of social ties on entrepreneurs depressed affect and withdrawal intentions in response to economic stress, Journal of Organizational Behavior, Vol.33, pp.789810 (2012) 4. Don J. Q. Chen and Vivien K. G. Lim , Strength in adversity: The inuence of psychological capital on job search, Journal of Organizational Behavior. Vol. 33, pp.811839 (2012)