Unpacking the psychology of job insecurity

Have you ever experienced the ticking time bomb of a job lay-off coming your way, leaving you feeling powerless? Or worrying that you might lose your job, with no certainty either way? Even feeling we are to lose a job is a better predictor of poor mental health outcomes than objective ratings of job loss risk.

Job insecurity is, after all, associated with a range of less-than-ideal outcomes. At a personal level, we are more prone to distress, burnout, low self-esteem and stretched family dynamics. At work, we are less committed, less trusting, more likely to bully, and less likely to collaborate, support and share knowledge with our teammates.

If you’re an organisation leader, this article is to help you understand what’s going on behind the curtains when your team gets the job-loss jitters. And if you are experiencing job insecurity yourself, we hope this article gives a name to the tough feelings you might be experiencing.

First, what is job insecurity? It’s important to know that there are different types. “Quantitative” job insecurity is when we feel concerned that we might lose our job altogether, whereas “qualitative” insecurity is when we feel like we are losing parts of the job that we love (e.g. flexibility, relationships or working conditions). Whatever it is we are feeling concerned about, the hallmarks of job insecurity are that it is subjective (it’s entirely in the eye of the beholder), it is uncertain (we can’t predict the outcome), and it leaves us feeling vulnerable.

All of this means that job insecurity can often go unnoticed, especially by a manager or team leader who isn’t regularly checking in on team members or making efforts to measure wellbeing across their organisation.

According to Massey University data, working New Zealanders who perceive that their jobs are least secure are nearly 15 times more likely to be at risk of burnout. Job insecurity takes a massive toll on our wellbeing.

When it comes to how job insecurity interacts with performance, research outlines several different ways of coping, resulting in vastly different behavioural responses.

• Psychological contract breach. Job insecurity can create what feels like a breach in the psychological contract between employer and employee. The psychological contract is different from the employment contract in that instead of objective, defined promises, it includes subjective, implicit promises and represents a set of beliefs and expectations between the two parties. It’s more about the informal and unwritten obligations and, when these are in conflict, employees may become less likely to follow through on their end of the deal (which was to perform at their best). Naturally, the stress that builds from persistent insecurity also results in increased cognitive and emotional strain, leading to less available energy to devote to work-related tasks. Both mechanisms result in decreased performance.
• Presenteeism. Other workers might try to stay under the radar so as not to arouse attention that might lead to losing their job. This might result in a culture of presenteeism (being visible at work but not working effectively). Concerningly, it may also manifest in a culture where people are reluctant to admit to mistakes, and even more reluctant to seek help or support to sort issues out effectively.
• Trying to out-perform colleagues (short-term). On the flipside, job insecurity can, in some cases, lead to improved performance. For these people, they feel motivated to out-perform their peers, seeking to demonstrate how valuable they are to the organisation. This might lead to better performance in the short-term, but it is effortful, meaning that it can only very rarely be sustained long-term.

The long and short of it – job insecurity generally results in reduced job performance, if not in the short-term then almost always long-term.

Naturally, the best remedy for job insecurity is strong, decisive communication that jobs are not at risk of being lost or restructured, or that working conditions are not going to change (for qualitative job insecurity). This is crucial where feelings of job insecurity are rife among employees, without any objective risk to back them up. And if you’re not sure whether job insecurity is a problem for your workforce, get data.

For organisations where job insecurity is a valid threat, adopt best leadership practices. Communicate clearly and transparently about the factors feeding into organisational change decisions. Set regular touchpoints to update on change processes and follow through on these. And, where possible, aim to reduce the period of job insecurity to be as short as possible, knowing that it usually leads to reduced performance as well as poorer wellbeing.

For those employees who may be motivated to fly under the radar and not draw attention to themselves during periods of job insecurity, ensure that people know they will not be unfairly treated if they speak up about what’s going on for them or seek support. Remind people that they can access confidential counselling through EAP (if available in your organisation), and that psychological safety is still a top priority in your team.

If you are experiencing feelings of job insecurity and this is negatively affecting your wellbeing and performance, it’s worth speaking upfront with your manager to gain some clarity about your job and to help reduce your sense of uncertainty.

Focus on what is within your sphere of control. Start with the basics; look after your wellbeing by eating and sleeping well, moving your body, and connecting with the people around you. When you are ready, reach into your toolkit of proactive coping strategies. That might include talking to professionals about how you are feeling (e.g. through EAP), or looking for new job opportunities (e.g. by job hunting or networking).

Whatever you do, practise self-compassion. Research shows that performance often dips during these periods so you shouldn’t hold yourself to your usual standards. Your wellbeing comes first.