Abstract
Despite the increase in the cases of organizations reducing payroll cost (i.e. cost of wages and salaries), studies comparing the consequences of payroll cost reduction methods (e.g. pay cuts and downsizing) have been very limited with no studies comparing the impact of these methods on job-seeker attraction. In this study, I compare the effects of cutting pay and downsizing on job-seeker attraction outcomes (i.e. general attractiveness of an organization, job pursuit intention, and number of job-applicants applying for job openings) by conducting a within subject design experiment and analyzing a secondary data. The results from the two studies demonstrate that organizations with a history of pay cuts yield more favorable job-seeker attraction outcomes than organizations with a history of downsizing. Managerial implications of these results are also provided.
Published Version
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