479

The
British
Psychological
Journal of Occupational and Organizational Psychology (2007), 80, 479–497
q 2007 The British Psychological Society
Society

www.bpsjournals.co.uk

Productivity, counterproductivity and creativity:

The ups and downs of job insecurity

Tahira M. Probst1*, Susan M. Stewart2, Melissa L. Gruys3

and Bradley W. Tierney1
1
Washington State University Vancouver, USA
2
University of Puget Sound, USA
3
Wright State University, USA

Organizations frequently downsize in the hopes of creating a ‘lean and mean’ company
able to be flexible and quick to adapt to changing environmental needs. The purpose of
the current research was to assess the effects of job insecurity on productivity,
counterproductivity, and creativity in a simulated organizational environment and a field
setting. In the first study, 104 non-traditional undergraduate students (M ¼ 30:48
years) participated in a laboratory experiment that manipulated the threat of lay-offs
(job insecurity) and measured creativity and productivity over two time periods.
Compared to control group participants, results indicate that participant productivity
increased in the condition of higher levels of job insecurity, whereas creative problem
solving decreased. In the second study, 144 employees in five organizations completed a
survey measuring their job insecurity perceptions, enactment of counterproductive
work behaviours, and creative problem-solving ability. Regression analyses indicate that
job insecurity predicted lower creativity scores, yet was also related to lower numbers
of counterproductive work behaviours. Taken together, these studies suggest that job
insecurity may have adverse effects on creativity, yet moderately beneficial effects on
productivity. Results are interpreted in light of the increasing prevalence of job
insecurity and organizational downsizing in today’s workplace.

Commercial rivalries around the globe, government deregulation of industry, and the
ever-increasing pace of organizational technology change have led organizations
worldwide to take extreme measures in order to remain competitive. Organizational
restructuring in the form of corporate downsizing, mergers and acquisitions, plant
closings, and workforce reorganizations affect millions of workers each year. According
to the Society for Human Resource Management (2001), 43% of US organizations
conducted employee lay-offs in 2000 and 2001, with corporate reductions averaging
10–13% of the workforce.

* Correspondence should be addressed to Tahira M. Probst, 14204 NE Salmon Creek Avenue, Vancouver, WA 98686, USA
(e-mail: Probst@vancouver.wsu.edu).

DOI:10.1348/096317906X159103
480 Tahira M. Probst et al.

These corporate reductions are often undertaken with the aim of producing a ‘lean
and mean’ organization – one that is flexible, ‘able to turn on a dime’, and quick to adapt
to changing environmental needs (Landsbergis, Cahill, & Schnall, 1999). Indeed, the
move away from large, hierarchical, rigid organizations was prompted by a perceived
need to be smaller, more flexible, and agile in order to be competitive in today’s global
market place (Bahrami, 1992; Lewin & Johnston, 2000). While there has been extensive
research conducted on the health and psychological outcomes of these organizational
changes (e.g. Kuhnert, Sims, & Lacey, 1989, Roskies & Louis-Guerin, 1990; Sverke,
Hellgren, & Naswall, 2002), relatively little research has been conducted that assesses
the extent to which they may influence creativity, productivity, or counterproductive
workplace behaviours. The current research provides insights into an under-explored
area by examining these variables using a multimethod approach in both the context of
a simulated organizational laboratory experiment as well as in a field study.

Threat of lay-offs, downsizing, and job insecurity

Although these terms are often used somewhat interchangeably, it is important to note
that the threat of lay-offs, downsizing, and job insecurity are separate yet highly correlated
constructs (Ashford, Lee, & Bobko, 1989; Kinnunen, Mauno, Nätti, & Happonen, 2000;
Rubach, 1995; Sverke, Hellgren, & Naswall, 2006). Downsizing is an organizational
practice involving the voluntary or involuntary reduction of the company’s workforce.
Often, actual organizational downsizing is preceded by the threat of lay-offs via formal
announcements or the spreading of rumours of such plans. Actual downsizing and the
threat of lay-offs have been repeatedly found to result in subsequent employee
perceptions of job insecurity (e.g. Ashford, Lee, & Bobko, 1989; Probst, 2003; Roskies &
Louis-Guerin, 1990). Thus, while these terms should not be used interchangeably, it is
largely agreed upon by researchers in the field that downsizing, mergers and acquisitions,
lay-offs, or even the threat of lay-offs all result in a workforce worried about their job
security. In the current study, we not only examine how creativity and productivity are
influenced by an explicitly stated threat of lay-offs in a laboratory experiment, but we also
examine in a field study how self-reported levels of job insecurity are related to creative
problem-solving and counterproductive behaviours at work.

Threat of lay-offs, job insecurity, and creativity

Creativity involves the production of original solutions to novel, ill-defined problems of
relatively high complexity (Besemer & O’Quin, 1999; Lubart, 2001; Scott, Leritz, &
Mumford, 2004). The foundation of creativity and creative problem solving is often
argued to be divergent thinking, or the ability to ‘think outside the box’ to produce novel
solutions (Vincent, Decker, & Mumford, 2002). It involves gathering information from
multiple sources and recognizing unusual connections (Oldham & Cummings, 1996).
Employee creativity is vital for entrepreneurial activities and long-term economic
growth (Amabile, 1997; Simonton, 1999; Wise, 1992). In addition, many of today’s
occupations – ranging from marketing (Rickards & Freedman, 1979), business
management (Basadur, Wakabayashi, & Takai, 1992), and educational administration
(Burstiner, 1973) to medicine (Estrada, Isen, & Young, 1994), engineering (Basadur,
Graen, & Scandura, 1986) and negotiations (Carnevale & Probst, 1998) – encourage and
depend upon creativity (Scott et al., 2004).
However, while many organizations cite increased flexibility and enhanced
innovation as benefits of restructuring and downsizing, many researchers argue the
exact opposite may occur. Pech (2001) reasons that while organizations may claim to
 Job insecurity and performance 481

encourage innovation and creative behaviour, organizational cost cutting and

downsizing serve to counter such behaviour. Similarly, researchers have argued that
innovation is likely to suffer as a result of downsizing due to an increase in risk-averse
thinking (Cascio, 1993) and behavioural rigidity (Cameron, Sutton, & Whetton, 1988).
Another possibility is that this increased rigidity is not intentional, but rather reflects an
underlying loss of cognitive flexibility (Carnevale & Probst, 1998).
In the first study to assess the effects of downsizing on employee creativity, Amabile
and Conti (1999) found that the work environment for creativity significantly declined
during organizational downsizing. Specifically, in their study of 754 employees,
respondents reported significantly less freedom, challenge, access to resources,
supervisory encouragement, work-group support, and organizational encouragement
following the implementation of organizational downsizing.
It should be noted that while the Amabile and Conti (1999) study was the first to
empirically assess the relationship between downsizing and creativity, there are a few
limitations to their data. First, their measures of creativity were self-report assessments
of the work environment for creativity and self-report assessments of actual creative
output. Therefore, there was no independent evaluation of the extent to which actual
creativity may have declined. Second, due to organizational constraints imposed during
their data collection, they were not able to collect data from the same employees over
the course of their longitudinal study. Therefore, their data are between-subjects data
rather than within-subjects data.
The current study addresses these two limitations by administering a creative
problem-solving task to participants in a laboratory experiment who are threatened
with lay-offs, as well as to a control group of participants who are not threatened with
lay-offs. In this manner, one can compare the actual ability to solve a creative problem-
solving task between those who have been threatened with lay-offs with those who have
not, but are otherwise in an identical organizational setting. Additionally, in a field study,
actual measures of employee creativity, rather than self-reports, are utilized and then
correlated with employee perceptions of their job insecurity. In order to address the
second limitation of the Amabile and Conti (1999) study, the current laboratory study
uses a within-subjects research design to track participant productivity before and after
the threatened lay-off.
While there has been little research to assess the relationship between the threat of
lay-offs or job insecurity on creativity, we expect that there will be a negative
relationship. According to Ironson (1992), job insecurity is one of the most significant
organizational stressors encountered by employees. Farr and Ford (1990) argue that
such stress can be expected to interfere with novel or creative processes due to
attentional conflict (Baron, 1986) and distraction while engaging in complex creative
task performance (Sanders & Baron, 1975). In support of this, Van Dyne, Jehn, and
Cummings (2002) found that psychological strain was related to lower levels of
workplace creativity among a sample of hair salon stylists, where creativity in styling
hair was rated by the employee’s supervisor. Further, Higgins, Qualls, and Couger (1992)
found that anxiety can negatively affect creativity during any of the four stages of the
creative problem-solving process (preparation, incubation, illumination, and verifica-
tion). Based on these ideas and the empirical findings reviewed above, we propose:

Hypothesis 1a: In the laboratory experiment, participants who are threatened with lay-offs will
score lower on a test of creative problem solving than participants who are not threatened with
lay-offs.
482 Tahira M. Probst et al.

Hypothesis 1b: In the field study, employees who perceive their jobs to be insecure will score
lower on a test of creative problem solving than employees who perceive their job to be more
secure.

Threat of lay-offs and productivity

There exists a fair amount of published research that examines the impact of downsizing
on corporate-level performance measures, such as company stock price and other
financial indicators, yet little research has been conducted on what happens to
individual performance in the wake of threatened lay-offs. For example, two recent
American Management Association surveys found that downsizing was not related to
subsequent increased organizational productivity or profitability (as cited in Madrick,
1995 and Rubach, 1995). Similarly, Morris, Cascio, and Young (1999) found no
consistent evidence that downsizing led to improved financial performance. Therefore,
a second purpose of the current research is to assess the effect of job insecurity on
individual, not corporate, performance.
Although there is plenty of evidence suggesting that job insecurity has negative
effects on worker health and attitudes (e.g. Kuhnert et al., 1989, Roskies & Louis-Guerin,
1990; Sverke et al., 2002), the relationship between job insecurity and performance is
less clear. In their meta-analysis on the causes and consequences of job insecurity,
Sverke et al. (2002) found no main effect for job insecurity on performance. However,
they point out that there are two possible reasons why a relationship between job
insecurity and performance was not observed: (1) there is, in fact, no relationship or
(2) job insecurity leads to enhanced performance in certain contexts, but decreased
performance in other contexts. We would add to this that performance itself can be
measured and defined in many different ways (see Campbell, 1990). According to Jex
(1998), one reason for the inconsistency in past performance research may be due to an
overly general conceptualization of job performance or inappropriate comparisons
between different types of performance (e.g. work effort vs. task proficiency).
For example, in a laboratory experiment investigating the threat of lay-offs and safety
behaviours and productivity, Probst (2002) found that participants were more
productive (as measured by the number of paintings they produced as part of their
assigned job task) when threatened with lay-offs, but those increased outputs were rated
as lower in quality and accompanied by more safety violations, compared with
participants who were not threatened with lay-offs. Thus, performance increased as a
function of lay-off threat when performance was measured as the quantity of outputs,
but decreased when operationalized as quality and safety behaviours.
The above findings illustrate the importance of clearly specifying the definition of
performance. In our current laboratory experiment, we operationalized performance as
job-specific task proficiency (i.e. productivity) which was measured by how effectively
participants were able to complete a series of assigned copy-editing tasks. Based on the
research reviewed above, we hypothesized that:

Hypothesis 2: In the laboratory experiment, participants who are threatened with lay-offs will
display higher levels of productivity than participants who are not threatened with lay-offs.
Theoretical work on the relationship between job stress and performance further
supports this hypothesis. Farr and Ford (1990) suggest that stress can cause employees
to focus on well-learned and habitual actions at work (such as those involved in routine
tasks). Other researchers suggest that in times of job insecurity, employees will focus
 Job insecurity and performance 483

their attention on those aspects of performance that are typically rewarded by the
organization in an effort to retain their job (Probst & Brubaker, 2001).

Job insecurity and counterproductive work behaviour

Counterproductive work behaviour may include harmful acts that are targeted towards
individuals, such as verbal harassment, assault, and the spreading of rumours, as well as
harmful acts directed against the company or its systems, such as sabotaging equipment,
stealing, and wasting resources (e.g. Hollinger, 1986; Neuman & Baron, 1997; O’Leary-
Kelly, Griffin, & Glew, 1996; Robinson & Bennett, 1995). There is some evidence to
support the idea that when job insecurity is high, employees might engage in higher
levels of counterproductive work behaviour. However, other anecdotal evidence
suggests that in the same situation, employees might engage in lower levels of
counterproductive work behaviour. We explore each of these ideas below.

Job insecurity – More counterproductivity

Employees in job insecurity and lay-off conditions experience considerable stress,
frustration, and anxiety (e.g. Brockner et al., 1994; Jacobson, 1987). Research suggests
that stressful working conditions may contribute to employees engaging in counter-
productive work behaviours (Burroughs, Bing, & James, 1999) including withdrawal
behaviours, such as absenteeism and tardiness (Chisholm, Kasl, & Eskenazi, 1983; Gupta
& Beehr, 1979), interpersonal aggression, hostility, sabotage, and complaints (Chen &
Spector, 1992). Results have been similar for those who experience frustration in the
workplace (Fox & Spector, 1999; Spector, 1975, 1978; Storms & Spector, 1987).
Research suggests that individuals may engage in counterproductive work behaviour in
an attempt to regain control over their environment (Bennett, 1998). It is very possible
that this might take place in a job insecurity context. Indeed, Lim (1996) found that
employees with higher levels of perceived job insecurity were more likely to engage in
‘noncompliant job behaviours’ (Puffer, 1987).

Job insecurity – Less counterproductivity

Alternatively, heightened perceptions of job insecurity may lead employees to engage in
less counterproductive work behaviour. This may be due to a fear of termination and the
associated financial ramifications with potential job loss. In short, employees who fear
that they might be laid off may be more likely to try to avoid any behaviour that would
increase the likelihood of losing their positions. This would especially be the case for
counterproductive work behaviours that are directly banned by organizational rules or
policies.
Research suggests that both the perceived certainty of receiving organizational
sanctions upon engaging in deviant behaviour and the perceived severity of those
sanctions are inversely related to counterproductive behaviours, such as employee theft
(Hollinger & Clark, 1983) and sexual harassment (Dekker & Barling, 1998). Thus, in a job
insecurity situation, if employees feel that if they engage in counterproductive work
behaviour they will receive sanctions by the organization and those sanctions will be
severe (in the case of job insecurity, the sanction may be loss of a job), then they will be
less likely to engage in such behaviour. Furthermore, employees in insecure job situations
have been found to be more risk adverse (Cascio, 1993); again suggesting that employees
would be less likely to engage in activities that could put their jobs in jeopardy.
484 Tahira M. Probst et al.

Since the evidence regarding the relationship between job insecurity and
counterproductive work behaviour is contradictory, the following research question
was posed and explored in our data analyses:

Research Question: In the field study, will employees who perceive their jobs to be
insecure engage in more or fewer counterproductive work behaviours than employees
who perceive their job to be more secure?

STUDY 1: THE LABORATORY EXPERIMENT

Method
Participants and research design
One hundred and thirty-one upper-division, non-traditional undergraduate students
enrolled in psychology courses at a small university located in the north-western region
of the USA were invited to participate in the laboratory experiment. Students in the
classes were offered extra credit for their participation in addition to the compensation
described in the Procedure section. Of the 131 students invited, 104 elected to
participate resulting in a 79.4% participation rate. Seventy per cent were female and the
mean age was 30.48 years. Out of the total number of participants, 81% were employed
(56% full-time) and 68% held or had held a supervisory position at work. In the past, 20%
had been laid-off and 16% had been responsible for laying off subordinates.
The research design was a 2 (between-subjects) £ 2 (within-subjects) laboratory
experiment, involving two conditions (experimental condition that received a threat of
lay-offs and control group) and two work periods (baseline and post-lay-off
announcement). Participants were assigned randomly to either the experimental
group or the control group. Work productivity was assessed over two work periods; the
first work period gathered baseline performance data, whereas the second measured
productivity following the lay-off announcement. Finally, creativity was assessed once
following the lay-off announcement (or after a brief break following the first work
period in the control condition).

Measures
Creativity
In order to assess creative problem-solving ability, one of Duncker’s (1945) functional-
fixedness tasks, which reflect fundamental processes in problem solving (Adamson &
Taylor, 1954) was used. In this task, participants are told that they must devise a solution
whereby a candle can be affixed to a bulletin board such that no wax drips to the floor
using only the following materials: a bulletin board, a candle, one match, and a box of
tacks. Participants were asked to write their solution on a piece of paper. The creative
solution, identified by Duncker, is to remove the tacks from the box, tack the box to the
bulletin board, and use it as a platform for the candle. The solution to Duncker’s candle
task requires the ability to see new aspects of the objects presented or to see among
them potential relationships other than the existing ones (Glucksberg & Danks, 1968).

Procedure
Each participant took part in one of two trials lasting approximately 1 hour each.
All participants were informed that they had been selected for a copy editor position
 Job insecurity and performance 485

with a simulated national on-campus college newspaper. Participants were given an

information packet containing the simulated newspaper’s history, its pay and benefits,
vacation policy, daycare facilities, and promotion policy. Participants were also told that
as part of the experiment they would have the opportunity to have their names entered
into a drawing to earn $10 cash prizes based on their performance.
Participants were offered compensation for their editing work during the study in
order to foster interest in the study and more closely mimic real-world employment
situations. They were told that they would receive one lottery ticket for each point they
earned in performance on copy-editing tasks. At the end of the experiment, all lottery
tickets would be collected, from which four tickets worth $10 each would be drawn.
Thus, the better each participant performed, the higher his or her chances of winning a
cash prize. Participants were aware of the number of participants in each trial
(approximately 25) and could roughly assess their chances of winning.
Participants were given information about their assignment, told that the experiment
was interested in the way individuals work under pressure, and informed about the
importance of working as quickly and accurately as possible. Their work responsibilities
were stated as follows: ‘(a) Make sure the article you submit to your manager is factually
correct; (b) Be sure that your article has no spelling errors; and (c) Check your article for
grammatical mistakes.’

Baseline performance
After a question and answer period, participants were given the correction sheet that
would be used to edit the newspaper articles and monitor participants’ performance.
During the first work period, participants were given an article to be copy-edited and had
5 minutes to find and correct as many spelling, grammatical, and factual errors as possible.
Performance was assessed using the following equation: (# of spelling errors identified
and corrected) þ (# of grammar errors identified and corrected) – (# of uncorrected facts
left in the article). Based on their performance, the corresponding number of lottery
tickets was allocated to participants immediately following the first work period.

Manipulation
After the first work period, participants in the randomly assigned experimental group
were then given an ‘urgent company memo’ stating that ‘due to low sales of our
newspapers and declining advertising revenues’, 50% of the editors would be laid off
after a second work period. No mention of any lay-offs was made to the randomly
assigned control group. The lay-offs would be based on their editing performance and
the laid off participants’ role in the experiment would end. It was again stressed that the
money in the lottery drawing was real, but that a laid off editor could not enter any
earned lottery tickets into the drawing.
After the memo was distributed (or after a brief break in the case of the control
trials), the Duncker candle task was handed out and presented as a filler task while the
experimenters prepared the following work period’s editing tasks. Participants were
given no time limit to solve the task. Furthermore, they were also told that there was no
right or wrong solution to the task and that their performance on the task did not affect
their chances in the lay-offs or lottery drawing.
After the Duncker candle task was completed, the second work period was
conducted following the same procedures described for the first work period.
Performance was assessed and lottery tickets were allocated.
486 Tahira M. Probst et al.

Following the second work period, a post-task questionnaire was administered that
assessed demographic information, a manipulation check, and hypothesis guessing in
the experiment. After completing the post-task questionnaire, participants were told
that their participation in the experiment had ended. Finally, participants were
debriefed and told there would, in fact, be no lay-offs. The lottery drawing was then
conducted and questions were answered.

Results
Manipulation checks
In order to assess the impact of the lay-off manipulation, participants in the
experimental conditions were asked if they believed that lay-offs would actually take
place. Eighty-eight per cent of the participants responded that they believed the lay-off
manipulation, x2 ð1Þ ¼ 29:82, p , :001: In addition, when asked if they believed that
they would actually have a chance to earn money in the experiment, 93% of all
participants indicated that they believed the lottery involved real money, x2 ð1Þ ¼ 74:94,
p , :001: Therefore, the lay-off manipulation was credible and participants realized that
real money was at stake. Finally, in response to an open-ended question assessing
‘hypothesis-guessing’, no participants correctly identified (or even came close to
identifying) the purpose of the study or our hypotheses. Additionally, none of the
participants expressed any prior familiarity with the Duncker candle task.

Performance changes
A repeated measures ANOVA was utilized to assess performance changes over time for
the control and experimental group participants. As can be seen in Table 1, results
indicate that there was a significant main effect for performance, Fð1; 102Þ ¼ 38:43,
p , :001 ðh2 ¼ :27Þ; such that performance improved for both groups over time. This
was to be expected as a function of task familiarity. More interestingly, there was the
expected significant interaction between experimental condition and time,
Fð1; 102Þ ¼ 7:81, p , :001 (h2 ¼ :07). As can be seen in Table 1, performance in the
group threatened with lay-offs improved significantly more from Work Period I to Work
Period II compared with the performance in the control group.

Table 1. Main and interactive effects from Study 1

Mean SD

Work period I performance 1.64 2.37

Lay-off condition 1.30 2.33
Control condition 2.02 2.38
Work period II performance 3.09 2.41
Lay-off condition 3.34 2.55
Control condition 2.79 2.22
Fð1; 102Þ ¼ 38:43, p , :001 (main effect for time)
Fð1; 102Þ ¼ 7:81, p , :001 (interaction effect for time £ condition)
Correct solution Incorrect solution
Duncker candle task performance
Lay-off condition 25 (45%) 31 (55%)
Control condition 31 (65%) 17 (35%)
x2 ð1Þ ¼ 4:14, p , :05
 Job insecurity and performance 487

Effects on creativity
Table 1 also shows the percentage of participants in each condition who were able to
solve the creative problem-solving Duncker candle task. Across both conditions, 54% of
participants were able to identify the creative solution to the candle task. However, as
anticipated, results indicate that the solution rate to the Duncker candle task was
significantly lower among individuals threatened with lay-offs (45%) than among the
control group participants (65%), x2 ð1Þ ¼ 4:14, p , :05:

Discussion
In this laboratory experiment, we examined the effects of the threat of lay-offs on
individual work performance and creativity. We found that participants who were
threatened with lay-offs increased their performance (after being threatened with lay-
offs) compared with the control group which saw relatively stable levels of performance
from Time I to Time II. Furthermore, the participants threatened with lay-offs were
significantly less likely to be able to solve the creative problem-solving task than their
counterparts in the control group.
These results provide initial evidence that the threat of lay-offs has a significant effect
on creative problem-solving ability. However, because laboratory experiments suffer
from limited ecological validity, we conducted the following field study which examines
the relationship between job insecurity and creativity. While a correlational field study
does not allow one to make causal inferences, it does have the advantage of greater
ecological validity. Therefore, if the results are consistent across the two different
research methodologies, a more compelling case could be made that: (a) job insecurity
affects creativity (and not the other way around) and (b) this relationship not only
occurs in an artificial laboratory setting, but also generalizes to the field.

STUDY 2: THE FIELD STUDY

Method
Participants and procedure
One hundred and forty-four employees from five organizations – a state-funded
elementary school for the disabled, a technical vocational college, a dental clinic, a bank
branch, and a computer chip manufacturer – participated in the second study.
Participants were given the survey in a large manila envelope at work which contained
all the measures described below, as well as a cover letter that addressed the
confidentiality and anonymity of the data (i.e. no names or ID numbers were to be
placed on the surveys). At most sites, participants were allowed to complete the survey
during working hours. When the survey was completed, participants placed it back in
the envelope, sealed the envelope, and in most cases, returned it by mail to the
researcher or the researcher collected the surveys in person. In a few cases, a
representative from the organization administered the survey and returned the
completed surveys to the researcher. The same procedure of sealed envelopes was used
to ensure that individual responses could not be connected to a specific person and that
no one within the organization accessed the surveys’ contents.
Several of the participating organizations were considered particularly relevant for
the current study as researchers have previously identified the educational and medical
488 Tahira M. Probst et al.

professions as two that require high levels of creativity for optimal performance
(Burstiner, 1973; Estrada et al., 1994). The elementary school had undergone severe
budget cuts in the prior 3 months and had downsized its workforce as a result through
early retirements and forced lay-offs. The dental clinic was one in a chain of 30 clinics
managed by out-of-state owners. The clinic had not undergone any lay-offs; however,
there was a great deal of mistrust of the corporate owners and their intended future
plans for this particular clinic. Similarly, the vocational college had not experienced
many lay-offs, but was experiencing uncertainty with regards to budget constraints,
pending retirements, and student enrolments. The bank branch had not experienced
any lay-offs, whereas the chip manufacturer had had several reductions in force.
Fifty employees from the elementary school (60% response rate), 32 employees from
the technical vocational college (58% response rate), 25 dental clinic employees (60%
response rate), 25 chip manufacturing employees (50% response rate), and 12
employees of the bank branch (80% response rate) participated in the study. The median
age category of participants was 35–39 years, 65% were female and 26% were
racioethnic minorities. The average organizational tenure was 6.08 years ðSD ¼
5:86 yearsÞ and there were 34 managers (24% of the sample).
It should be noted that we originally collected data from multiple organizations in
order to examine differences in employee job insecurity perceptions across
organizations. We thought that the mean level of perceived job insecurity for employees
may vary from one organization to the next due to differences in the level of threat of
lay-off, downsizing history, etc. However, we did not find that the mean level of job
insecurity perceptions differed across samples, therefore, the decision was made to
combine them into one sample.

Measures
Job security
Nine items from the Job Security Index (JSI, Probst, 2003) were used to measure
perceptions of job insecurity. The JSI assesses an employee’s cognitive appraisal of the
future of his or her job with respect to the perceived level of stability and continuance of
that job. Respondents indicated on a 3-point scale (yes, ?, no) the extent to which the
nine adjectives or phrases described the future of their job (e.g. ‘unpredictable’, ‘stable’,
‘unknown’, ‘my job is almost guaranteed’, ‘uncertain’). Responses were scored such
that higher numbers reflect more job insecurity. The Cronbach’s a reliability of the scale
was .92.

Creativity
In order to assess creativity, we used seven items from the remote associates test (RAT)
developed by Bowers, Regehr, Balthazard, and Parker (1990), a measure of the ability to
see relationships between ideas that are remote from each other. This test has been used
in previous studies as indices of creativity (e.g. Bennett, 1975; Gall & Mendelsohn, 1967;
Mednick, 1962, 1964; Mednick & Mednick, 1967), creative problem solving (Bowers,
1971), and intuition (Bowers et al., 1990). Items were chosen to span all difficulty levels
based on normative data on these items gathered by Shames (1994). Participants were
given seven sets of words and asked to identify a word that would fit with each set of
words. A sample set was ‘Broken : : : Clear : : : Eye’, where the correct answer was
‘Glass’. Although each RAT item was scored a 1 if the respondent indicated the answer
 Job insecurity and performance 489

provided in the scoring key (e.g. ‘glass’ in the previous example), participants were
informed that there were no ‘correct or incorrect answers’ in order to alleviate any test
anxiety and to remove any incentive for co-workers to consult with each other in finding
the correct answers. The Cronbach’s a reliability of the scale was .86. Scores could
range from 0 to 7, with higher numbers reflecting more creativity.

Counterproductive work behaviours

Employee enactment of counterproductive work behaviours was measured using 12
items from the Bennett and Robinson (2000) organizational deviance scale.
Respondents indicated on a 5-point scale the frequency with which they engaged in
such behaviours as ‘taking property from work without permission’ and ‘putting little
effort into your work’. Responses were scored such that higher numbers reflect higher
engagement in counterproductive behaviours. The Cronbach’s a for the scale was .79.

Demographic variables
We also asked participants to report their gender, age, race, and other demographic
information as part of the survey.

Results
Descriptive statistics and variable intercorrelations
Table 2 presents descriptive statistics for and intercorrelations among the study’s main
variables. As can be seen, job insecurity was negatively related to the enactment of
counterproductive work behaviours. Age was positively related to creativity scores and
negatively related to counterproductivity. Finally, minority status was negatively related
to creativity scores, such that racioethnic minorities scored lower than White/non-
Hispanics.

Table 2. Descriptive statistics and intercorrelations among variables in Study 2

Variable M SD 1 2 3 4 5

1. Age 5.25 2.27 2 .13 .08 .18* 2.20*

2. Minority status 1.26 .44 2 .01 2 .18* 2.12
3. Job insecurity 1.97 1.01 2 .15 2.21*
4. Creativity 3.26 2.43 .05
5. Counterproductivity 1.62 .49

Note. *p , :05; Minority Status 1 ¼ White/Non-Hispanic; 2 ¼ Racioethnic Minority.

Regression analyses
Due to significant correlations with the dependent variables of interest, age and
minority status were included as control variables in the regression analyses. In addition,
because there were significant differences across organizations in creativity scores and
self-reports of counterproductive work behaviours, organizational site was also entered
as a control, multivariate Fð8; 272Þ ¼ 3:11, p , :005: Hierarchical multiple regression
analyses were conducted entering the control variables in block one (i.e. age, minority
status, organizational site) and the predictor in block two (i.e. job insecurity). Creativity
and counterproductive work behaviours were regressed onto the predictors in separate
analyses. The results can be seen in Table 3.
490 Tahira M. Probst et al.

Table 3. Regression results from Study 2

Dependent variables

Variable Creativity CWBs

Step 1
Age .12 2 .12
Minority status 2 .20* 2 .14
Site 2 .04 .24**
DR2 .06 .09
DF(3, 125) 2.69* 5.42**
Step 2
Job insecurity 2 .17* 2 .18*
DR2 .03 .03
DF (1, 124) 3.78* 4.69*

Note. *p , :05; **p , :01.

Creativity
As can be seen in Table 3, minority status was significantly related to creativity scores
(b ¼ 20:20, p , :05), whereas age and site were not. Entering job insecurity
perceptions into the equation accounted for an additional 3% of the variance. Job
insecurity was a significant predictor of creativity scores on the remote associates test
(b ¼ 20:17, p , :05), suggesting that greater perceptions of job insecurity were related
to lower scores on the creativity test.

Counterproductive work behaviours

Organizational site (b ¼ 0:24, p , :01) was a significant predictor of counterproductive
work behaviours (CWB). Including job insecurity perceptions into the analysis
accounted for an additional 3% of the variance, such that greater perceptions of job
insecurity were related to fewer self-reports of engaging in counterproductive work
behaviours (b ¼ 20:18, p , :05).

Additional exploratory analysis

In order to further explore the relationship between job insecurity and counter-
productive work behaviours, we examined the data scatterplot (see Figure 1) and
observed an interesting pattern. Although job insecurity was negatively related to
counterproductive behaviours ðr ¼ 2:21Þ, it also appeared that the variance of CWBs
changed with differing amounts of job insecurity. Specifically, the correlation between
perceptions of job insecurity and the corresponding variance in reports of CWBs was
2 .29. This suggests that higher levels of job insecurity may be related to greater
suppression of the variability in the expression of these behaviours.

Discussion
In this field study, we examined whether perceptions of job insecurity were predictive of
counterproductive work behaviours as well as one’s creative ability to solve a series of
remote associate tests. The field study findings comport with the laboratory data by
 Job insecurity and performance 491

Figure 1. Scatterplot showing relationship between perceived job insecurity and counterproductive
work behaviours.

suggesting that higher levels of job insecurity were related to fewer correct responses on a
creative problem-solving test. Like in the laboratory study, participants did not make the
connection between the creativity test and the other measures. In fact, it was reported
that most participants viewed the creativity test questions as ‘fun’ distractor items.
We also found that individuals who perceived their jobs to be insecure were less likely
to engage in counterproductive work behaviours than individuals who reported being
relatively more secure in their positions. One intriguing explanation for this finding was
suggested by the examination of the relationship between job insecurity and variability of
CWBs. When employees perceived their jobs to be secure, the full range of CWBs was
exhibited. However, as employees increasingly perceived their jobs to be insecure, the
range of CWBs was increasingly restricted to the lower end of the range. This suggests that
not only is job insecurity related to fewer CWBs, but it is also related to less variability. This
lends support to the notion that perhaps employees engage in fewer CWBs when they
perceive their jobs to be insecure in an attempt to retain their job. On the other hand,
when employees perceived their jobs to be secure, a wide range of counterproductive
behaviours (perhaps a more natural distribution of behaviours) was observed.

GENERAL DISCUSSION
The purpose of the current research was to examine empirically the relationship
between job insecurity, creativity, and two aspects of work performance: productivity
(assessed in the laboratory experiment) and counterproductivity (assessed in the field
study). Taken together, the consistent results of the two studies provide support for the
hypotheses and insight into the research question.

Creativity
The possibility that the threat of losing one’s job may have a negative impact on creative
problem-solving abilities is provocative. Our results demonstrate that this is the case,
and provide support for previous theorizing on the negative effects of downsizing on
creativity (Cameron et al., 1988; Cascio, 1993; Staw, Sandelands, & Dutton, 1981) while
492 Tahira M. Probst et al.

complementing the aforementioned Amabile and Conti (1999) field study findings by
addressing the main limitations of their data. Most importantly, at a time when
organizations are increasingly citing enhanced innovation and creativity as benefits of
downsizing (Cascio, 1993; Heenan, 1989), the current data suggest that the opposite
may in fact be true.
There are a number of plausible explanations for why job insecurity has a
detrimental effect on creativity. Creativity levels may have decreased due to a drain in
working memory resources. In a study of negotiation outcomes, Carnevale and Probst
(1998) found that negotiators who were faced with a competitive upcoming negotiation
were less able to solve similar creative problem-solving tasks and exhibited less flexible
cognitive thinking than negotiators who were led to expect a cooperative negotiation.
Similarly, Shanteau and Dino (1993) found a negative relationship between
environmental stress (e.g. disrupted sleep patterns, noise, and overheating) and the
ability to solve novel creative tasks. However, these same participants were able to
complete rote decision-making tasks. They concluded that stress impairs performance
on novel tasks, but not routine ones due to the increased cognitive requirements for the
novel tasks. In this study, the creativity tasks were unrelated to their normal job duties
and were novel tasks to the participants. Thus, perhaps individuals in our study who
were preoccupied with the attentional demands of a threatened lay-off (a contentious
anxiety-provoking situation) experienced similar cognitive difficulties in completing the
(novel) creative problem-solving tasks, but did not experience such cognitive difficulties
on the (routine) copy-editing work tasks.
On the other hand, Amabile and Conti (1999) conclude that a negative impact on
creativity is due to a decline in the work environment support for creativity. However, in
our study, there was no connection between the participant’s creativity scores and job-
related outcomes. Therefore, changes in the level of support for creativity in the work
environment cannot fully account for the observed results. Rather, it appears that
participants truly had more cognitive difficulty finding the creative solution when
threatened with a lay-off or preoccupied with their job security. It may be, as theorized
by other researchers (e.g. Carnevale & Probst, 1998; Staw et al., 1981), that the threat of
lay-offs actually leads to increased cognitive rigidity and a dysfunctional restriction in
information processing.
Clearly, there needs to be additional research to determine the exact reason for the
decline in creativity among individuals with a high sense of job insecurity. However,
while the mechanisms for the observed effect may not be fully understood, the data are
clear in that they suggest creativity is negatively impacted by the threat of lay-offs.
Therefore, organizations planning to downsize in the hopes that increased flexibility and
enhanced innovation will result may need to consider the possibility that the opposite,
in fact, may occur.

Productivity and counterproductivity

When it comes to individual work performance, job insecurity appears to have a
somewhat beneficial effect. Across both the laboratory and field studies, it was found that
job insecurity improved productivity and decreased negative, counterproductive work
behaviours. What might explain these findings? Eysenck and Calvo’s (1992) processing
efficiency theory would suggest that anxiety (such as is expected to result from high
perceptions of job insecurity) can either (a) drain working memory resources leading to a
decrease in performance or (b) increase cognitive arousal thereby serving as a
 Job insecurity and performance 493

motivational source that results in performance improvement. It may be that

performance increases in the short term because of an enhanced level of cognitive
arousal. For example, in our laboratory study, participants may have increased their
performance in an attempt to retain their job using the only means they knew. On the
other hand, how can the performance gains witnessed in this study be reconciled with the
fairly definitive studies showing that macro-level organizational performance is not
enhanced by downsizing?
The answer may be found in the Probst (2002) experiment reviewed in the
Introduction. In that study, the threat of lay-offs did not only result in productivity gains,
but also resulted in lower product quality and more violations of organizational safety
rules. Thus, one may have individual gains in productivity, whereas macro-level
organizational gains are not observed given an increase in worker compensation claims
due to increased injuries and a decrease in overall product quality.

Strengths, limitations and directions for future research

A main advantage of the current research lies in its use of complementary methods to
examine the relationship between the threat of lay-offs, job insecurity, creativity, and
performance. The laboratory study allowed for experimental manipulation and random
assignment of participants to conditions, and the field study offered ecological validity
and realism. Thus, the strength of our conclusions may be bolstered given the
consistency of our findings across these two very different methods.
Nonetheless, despite the use of multiple methods, there are certain limitations in our
studies that must be acknowledged. First, in the laboratory experiment, the participants
knew that this was a simulated organization, and was of course not their real place of
employment. In addition, the number and length of the work periods was limited due to
time constraints. In short, the ecological validity of the experiment was somewhat low.
However, according to Mook (1983), laboratory experiments are useful because they
demonstrate the power of a phenomenon by showing it can happen even under artificial
laboratory conditions. The fact that we found lay-off effects on creativity and performance
despite the fact that this was not a real job and the negative consequences of being ‘laid
off’ were not financially devastating only attests to the power of the phenomenon. If
effects of this size are observed in a laboratory, one could argue that the effects in the field
where real jobs and large dollar amounts are at stake would be much greater. Therefore,
while the amounts of cash incentives were relatively small and the work periods were
conducted within an hour, we would argue that these results only attest to the impact that
the threat of job loss has, even under the most artificial of conditions.
In the field study, we were limited by the use of self-report perceptions of job
insecurity because we could not manipulate the actual threat of lay-offs. Common
method variance may then account for a certain amount of the variability observed
between the self-report measures of job insecurity and CWB. However, common
method variance is unlikely between the job insecurity measure and creativity, since
creativity was measured with an actual test of creative problem-solving ability. In fact,
we believe that actually measuring creative problem-solving ability, rather than relying
on self or supervisor assessments of creativity, is a strength of the study. Furthermore,
there may be unmeasured variables that could potentially account for the observed
effects (in terms of providing additional explanations for our results). Hence, we
recommend that future research on this topic consider the inclusion of additional
variables so that they may be examined and potentially controlled for.
494 Tahira M. Probst et al.

A final criticism that may be levelled against the field study concerns its use of a
cognitive, rather than an affective, measure of job insecurity. One might argue that not all
people react to perceptions of job insecurity in the same fashion, and therefore, an
affective measure may have been more appropriate. However, research has shown that
the correlation between cognitive and affective measures of job insecurity is extremely
high (.71; Probst, 2003) and indeed, in this study, where we had both cognitive and
affective measures for a subset of the field participants ðN ¼ 75Þ, the correlation was .87.
Nonetheless, in order to better determine the actual amount of conceptual similarity
between the threat of lay-offs in the laboratory experiment and the perception of job
insecurity in the field study, future research should include both cognitive and affective
measures to assess whether the same phenomenon is being measured in both settings.

Conclusion
There are many reasons that organizations may conduct lay-offs, ranging from simple
cost-cutting measures to more focused strategic efforts. Regardless of the rationale for
conducting lay-offs and other actions that may increase job insecurity, it should be noted
that such a situation undoubtedly has an impact on creativity, productivity, and
counterproductivity. The very creativity and flexibility that is hoped for as a goal of
downsizing may not materialize. While productivity may increase and counter-
productivity may decrease in job insecurity conditions, these effects may be time limited
such that over time these effects may disappear. While the mechanisms for these
observed effects may not be fully understood, the data are clear in that they suggest
individuals are impacted by the threat of lay-offs.

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Received 31 August 2005; revised version received 25 September 2006