Despite the well-documented negative effects of job insecurity on workers’ well-being, many employers continue to intentionally stoke fears of job loss among their workforce, under the assumption that this can motivate workers and reduce costs. But is this approach actually effective? The authors conducted a series of surveys with more than 600 American employees and found that while job insecure workers may indeed be motivated to try to improve their performance and adhere more closely to company policies, the stress, frustration, resentment, and exhaustion associated with this insecurity create a cognitive load that counteracts any positive effect on performance or rule-following. Job insecure workers are also more likely to focus on making their contributions visible rather than on actually doing valuable work, and some even hide information or intentionally sabotage their coworkers to make themselves look better in comparison. Worse yet, many of these behaviors spark vicious cycles that further reduce perceptions of job security. As such, the authors argue that fostering a sense of job insecurity isn’t just cruel — it’s often counterproductive.
According to a recent poll, 15% of U.S. workers today feel at risk of losing their jobs (despite actual unemployment rates remaining at record low levels). And this is no accident: Studies have shown that many workplaces intentionally stoke fears of job loss in an attempt to motivate workers and reduce costs, since job insecure workers may be less likely to demand raises and other benefits. Indeed, organizations such as Facebook and General Electric have made no secret of their strategic use of the threat of job loss to boost performance, despite the well-documented negative effects of job insecurity on employees’ sense of social connection, identity, and physical and mental health.
The impact on employee well-being is clearly problematic. But moral issues aside, we were curious about whether this approach actually works when it comes to boosting performance. So, we conducted a series of surveys with more than 600 American employees across a wide variety of industries to explore the relationship between perceived job insecurity and workplace behaviors — and we found that while job insecurity might boost certain short-term performance metrics, overall, it’s a serious net negative for employees and organizations alike.
Job insecurity can push workers to try to improve performance…
When we asked the workers in our studies what they did when they felt insecure about their jobs, many described how they would take on additional work, stay late, and try to perform well. As one manager in retail trade explained, “My company had previously had furloughs and layoffs … Knowing this, I try to make myself vital to keeping my department’s operations going, as well as really try to contribute above and beyond my existing responsibilities. I think [this] has gone a long way in helping me keep my job.” A nursing manager described a similar approach: “In the past, when I have been faced with the possibility of losing a job, I have typically tried to examine my own behavior and determine if any improvements can be made in my work ethic or job performance that would enhance my job security.”
And yet, when we asked people to reflect on how well they were performing at their core job tasks, we found that feeling greater job insecurity had no impact on performance three months later. This is in line with prior research, which has largely found that job insecurity has either no correlation or a slightly negative correlation with performance ratings. Moreover, we also found that even when people felt that their performance had improved, it didn’t seem to reduce their job insecurity. In other words, despite their stated desire to improve, people didn’t actually perform better as a result of feeling more job insecurity, and when they did perform better, it didn’t actually alleviate their insecurity.
…but the extra burden often cancels out the benefits.
This is because while job insecure workers are motivated to try to perform well, the threat of job loss (and associated stress, frustration, resentment, and exhaustion from taking on extra work or looking for other jobs) makes it harder for them to perform, essentially cancelling out any potential benefits. As one participant put it, “I’ve found that being worried about my job makes me a less effective worker rather than a more effective one. I’m more likely to be anxious and distracted.” Another described feeling like “a walking ball of anxiety” due to the threat of layoffs, ultimately making him less able to impress management despite his efforts to work harder and self-advocate. When you’re stressed about losing your job, it takes more effort to maintain the same level of performance — so even if you’re more motivated to improve, that extra work is unlikely to pay off with better results.
Job insecure workers are less likely to follow the rules.
Beyond general performance, we hypothesized that feeling greater job insecurity might cause workers to avoid rule-breaking behaviors such as arriving late or sabotaging company property. For example, as a teacher in our study described, “I constantly do everything that I am asked to do, and I try to fly under the radar. I am afraid that if I speak out or do anything against the norm, that I am at risk of being fired, especially during such trying times.” A retail worker shared a similar mindset, explaining, “I have had fears [of job loss] in the past … what I mainly did to avoid losing my job was always ensuring I was on time, never taking long lunches, and trying my best to clock out on time to avoid overtime.”
But when we looked at the data over time, we again found that people’s intentions did not always line up with their actions. Despite their greater motivation to follow rules, workers who felt more job insecurity were actually more likely to break rules over the next three months. And unsurprisingly, workers who reported more misbehavior were likely to feel more insecure about their jobs, creating a vicious cycle in which greater job insecurity leads to more (if unintentional) rule-breaking, which in turn further decreases perceived job security. Just as with performance, the self-control necessary to follow rules takes substantial cognitive resources, and so the increased mental load caused by job insecurity makes people less able to follow protocols even if they want to.
Job insecure workers prioritize visible contributions — not necessarily valuable ones.
Finally, we found that the more worried people are about losing their jobs, the more they’re likely to focus on making their boss aware of their contributions, rather than on actually improving their performance. While some amount of impression management is healthy, many of the workers in our studies prioritized making their work visible over doing tasks that may have been more valuable to the organization, and some would even hide information or intentionally sabotage their coworkers to make themselves look better in comparison.
For example, one employee suggested that rather than doing the best work possible, they were mostly concerned about appearing to be better than their colleagues: “As long as there is someone else who isn’t as strong,” they shared, “I should be safe.” Others described how self-promotion was “a key part of protecting my job,” and how when they felt uncertain about the security of their job, they focused on “trying to make myself look valuable” and ensuring they were seen as “three times better than the next person.”
Interestingly, we found that in some cases, hiding knowledge from colleagues did in fact reduce workers’ job insecurity, perhaps because it could be an effective strategy to make them feel irreplaceable and therefore more confident in their position (though this is clearly to the detriment of the organization). However, excessive focus on making their own contributions more visible wasn’t only costly to employers, but it also further decreased workers’ perceived job security, likely because the extra attention increased the pressure on these workers to perform and thus added fuel to the fire of their job insecurity.
Job insecurity doesn’t pay off.
To be sure, when it comes to motivating employees, there’s certainly a place for both the carrot and the stick. But our data suggests that fostering a sense of job insecurity isn’t just cruel — it’s often counterproductive. As one participant described, “Whether you’ve been laid off, downsized, forced to take early retirement, or seen contract work dry up, losing your employment is one of life’s most stressful experiences. Aside from the obvious financial anguish it can cause, the stress of losing a job can also take a heavy toll on your mood, relationships, and overall mental and emotional health.”
When workers are worried about losing their jobs, their performance doesn’t improve, they break more rules, and they focus on selling themselves, often to the detriment of their teams and their organizations. Even worse, many of these behaviors spark vicious cycles that further reduce job security, harming both individual well-being and organizational outcomes. Of course, there’s no eliminating job insecurity entirely — but our research suggests that whether they’re motivated by boosting well-being or performance, leaders should do what they can to help employees feel confident and secure in their roles.