Pay Cuts vs. Downsizing in Maintaining Work Attitudes: Individual and Job-Related Moderators

Abstract

Despite the increase in payroll cost reduction activities, studies directly comparing the effects of pay cuts and downsizing on work attitudes have been limited. More importantly, no effort has been made to establish a model that identifies contextual factors in this comparison. The current study establishes a model of individual and job-related contextual factors in this comparison. Based on the expectancy theory (Vroom, 1964), four contextual factors, pay level, gender, trust in managers and amount of training received, were identified. Downsizing survivors exhibited higher levels of work attitudes than pay-reduced employees in groups of males, employees with low pay level, employees with low trust in managers, and employees who received small amount of training. On the other hand, no significant difference in the levels of work attitudes between downsizing survivors and pay-reduced employees was observed in groups of females, employees with high pay level, employees with high trust in managers, and employees who received large amount of training.