Retrenchment of white collar workers in Australia is widely reported and accepted as a management practice. The literature suggests that retrenchment is generally expected to have negative effects on retrenchee.
This research was conducted on white collar workers in Australia to define the underlying psychological constructs that cause the known effects on retrenchees. Further, this research investigates the current practices of outplacement as a means of ameliorating these causes. Past research into the effects of retrenchment on retrenchees has been based on small-scale case studies or qualitative data and has lacked rigorous large-scale quantitative investigation. Additionally, while both theorists and practitioners have offered outplacement as a process to ameliorate the effects of retrenchment on retrenchees, the current measure of the effectiveness of outplacement has been primarily based on re-employment statistics of the retrenchees.
The current literature on retrenchment suggests that the act of retrenchment has a significant effect on the psychological well being of a retrenchee. However, until now, no attempt has been made to establish any underlying psychological constructs that might be used to explain these effects and posit methods and process that might be used to address them. Given the large amount of white collar workers who are retrenched each year in Australia, and are placed through outplacement programs, this research sought to define the impact that the current practice of outplacement has on the underlying psychological constructs that the retrenchees experience. By defining the underlying constructs, concern over uncertainty, pressure to find a new job, loss of self concept and attachment to the former organisation, the services of outplacement are tested as a means of amelioration.
An ex post facto research design was utilised to provide an understanding of what factors contribute to the effects on retrenchees. Semi-structured interviews were then conducted to further develop the questions and expectations that were developed from the literature review. As a result, a quantitative mail survey was developed and administered to white collar retrenchees in Australia.
Profile analyses were conducted to test demographic variables such as age and gender against the underlying psychological constructs developed. Personal variables such as receiving outplacement or having debt were also tested against these constructs. It was found that outplacement was ineffective in ameliorating the underlying psychological constructs. However, both the age and gender of the retrenchee had a significant influence on the intensity that the retrenchee experienced the underlying psychological constructs. The emotional response to being retrenched along with the retrenchee's preparedness to work in another organisation also affected the level to which the retrenchee experienced the underlying psychological constructs.
The outplacement experience was found to not consider the retrenchee's readiness to gain a new job or to focus on job searching activities. However, none of the tested demographic or personal variables altered the outplacement experience of the retrenchee.
The research also demonstrates that the retrenchee's debt status, emotions over being retrenched and preparedness to work for a different organisation affect the level of loyalty given by retrenchee's to a new employer.
The findings from this research are the basis for a proposed new model of assisting retrenchees by considering the demographic and personal variables which are indicated to influence the level of the underlying psychological constructs. By tailoring assistance based on demographic variables such as age and gender, the retrenchees can be transitioned to cope with what is deemed as a largely negative experience.
The identification of underlying psychological constructs has enabled practitioners who deal with retrenchees to understand the effects of retrenchment at a specific level rather than as a generalised, descriptive level. Further, as the current practice of outplacement has been shown to not lower the underlying psychological constructs, this research has suggested changing the assistance offered to consider demographic and personal variables.
The findings of this research extend the current theory of retrenchment by identifying the underlying psychological constructs. Additionally, advance notice of impending retrenchments needs to be provided so as retrenchees have time to adjust to their impending employment status change.