The frequency and rapidity of change in the workplace today makes it especially challenging. Fugate noted, “The dynamic environment generates significant levels of uncertainty, which is a major driver of employee perceptions of threat.” The study of threat appraisal has mainly been applied in clinical settings (e.g., psychology and health literatures). This is one of the few and first studies ever with this kind of rigor and analysis in the work context with significant workplace implications,” Fugate explained.

The View Inside

Data from 153 employees in a department at a public services organization were studied, both at the onset of change and after the restructuring was completed. The department experienced 13 percent voluntary turnover for the 18-month time period of the study. Results showed that employee perceptions of threat predicted this turnover. Beyond this, Fugate and his colleagues also identified both person-centered and situation-centered predictors of threat. In so doing, they illuminate what drives employee perceptions of threat and subsequent behaviors, which provide practical utility to organizations managing change.

On the individual side, positive attitudes, self-efficacy, and job satisfaction are analyzed in the context of how they impact employee’s perception of threat. A positive attitude facilitates adaptation to the demands of organizational change. Self-efficacy indicates whether people believe they are able to meet the demands placed upon them (e.g., the confidence in their own competency). Uniquely, job satisfaction in this study is defined as a resource rather than an outcome as is traditionally thought in the organizational literature. Over time, an employee builds up the resource of job satisfaction when times are good; when times get tough, the resource becomes depleted. Fugate related the implications: “Job satisfaction helps inoculate and protect the employee against some of the challenges of a restructuring. If the restructuring is very difficult and challenging, then we would expect job satisfaction to be drawn down significantly. If one is satisfied, it’s easier to take bumps in the road.” With low job satisfaction, an employee is more prone to perceiving the restructuring as threatening and thus more likely to quit.

On the firm side, several ‘situational characteristics’ help determine an employee’s appraisal of threat and their experience. Job security, trust in management, and perceived organizational support were found to be most relevant in the context of this study. These situations are anchored in the relationships between management and employees, rather than in outside forces, such as a volatile economy or other job alternatives. Thus management can control and manage these situational characteristics to its benefit and reduce perceptions of threat. “Looking at both individual and environmental characteristics gives a broader yet more precise set of tools with which to manage the situation,” Fugate pointed out. With resource constraints as a business reality, the findings show how to make better resource allocations when managing employee reactions and outcomes related to a restructuring.

Another issue for firms to consider is the rigidity displayed during organizational change. The control firm’s exercise to implement new courses of actions can lead to employees feeling more threatened. For example, a lack of communication increases an individual’s uncertainty, and increased organizational constraints limit employee control and range of options for responding to new demands. Regardless of any individual factors, this rigidity powerfully influences employee perceptions of threat. In this study, marching orders were in fact “handed down,” and thus organizational rigidity may have led to employees’ perception of little control or influence and increased threat.

Navigating Change

So, what should a firm do to mitigate the undesirable effects of a restructuring? Fugate suggests the following:

• Pay attention to employees’ perception of threat. Determine (e.g., assess) the levels and sources of employee perceptions of threat.
• Understand that perceptions of threat may have many negative consequences, and the prudent manager considers a wide array of possibilities. Management needs to consider the sources of threat; many times managers don’t consider enough variables in a set of negative outcomes.
• Look at both characteristics of individual employees themselves as well as characteristics of the situation. In particular, determine how a supportive environment, trust in management, and perceptions of job security affect employees (e.g., behaviors) in a given context.
• If you have to make a choice as a manager, results of this study suggest that one should focus on situation characteristics and how the organization relates to its employees (especially in this study with its characteristics).
• Communication is critical. Managers must communicate openly, honestly, and consistently with employees throughout the change process. Moreover, two-way communication is better still. This way important information is disseminated, and employee reactions and suggestions are gained.

Although beyond the scope of this research, Fugate offers sage advice to individuals coping within today’s dynamic work environment:

• Job security is a completely individual thing. You are useful to an employer only to the extent your current skill set matches the employer’s current strategies and needs. As those strategies and needs change over time, you too must alter your skill set. Therefore, it is essential for one to continuously learn and be flexible.
• Be proactive. You want to learn about information in the environment, your industry, and your organization, which enables you to anticipate and/or prepare for changes. Also, consider how your skill set compares with those of others. Is it obsolete or on par? Is there value in the eyes of the market for what you do and how you do it?

For individuals, being proactive and adaptive are the attributes that can help workers both weather and excel in today’s stormy workplace climate. From the restructuring firm’s perspective, understanding how you implement and communicate about change matters significantly in the realm of employee perceptions and behaviors. Fugate summarizes: “Objectively, in this study, jobs weren’t threatened, yet employees still perceived their jobs to be threatened. As we know, your perception defines your reality and often differs considerably from objective facts. Managers are well served to carefully consider this when managing change.”

Note: This summary is based on the paper “The Antecedents and Consequences of Threat Appraisal During an Organizational Restructuring” by Mel Fugate of SMU Cox, Gregory Prussia of Seattle University, and Angelo Kinicki of Arizona State University. For a copy of the complete paper, please call the Cox Marketing and Communications Office at 214-768-1794.