How does job security impact employee performance?

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What is job security? Simply put, it may be defined as the probability that an individual will retain his/her job. The higher the job security, the less likely a person is to lose his/her job. In fact, several studies have indicated that job security is directly related to employee satisfaction. Having higher job security means reduced stress about having to arrange for a steady flow of income, which translates to happier and more satisfied employees who enjoy better health and an improved life-style.

Although it sounds really encouraging and promising, it may be worthwhile to explore the impact that job security has on employee performance. It is an important parameter in the socio-economic cycle since employee performance contributes to an organization’s success and has a direct bearing on its efficiency and profitability. If the organization is successful and is able to sustain growth and maintain profitability, it will lead to creation of wealth and more employment opportunities. However, if efficiency or profitability declines, it is only a matter of time before the organization wades into a downward spiral which shall not only put existing jobs at risk but may also result in bankruptcy and eventual shutdown. This shall affect not only those who are presently employed by the organization but also those prospective future employees who might have got an opportunity to earn a livelihood if the organization had been able to sustain its profitability.

It is, therefore, imperative to ensure that an organization’s efficiency and profitability are not compromised by assuring unfaltering job security to its employees at the cost of efficiency and performance. Rather, job security should be directly tied with employee performance. If an employee is hard-working and performing well, then he/she should be rewarded with adequate job security and compensation. However, if performance degrades, then job security and compensation should be adjusted accordingly. In other words, job security should be based purely on performance and not taken for granted.

Job security leads to complacency which, in turn, gives rise to inefficiency and poor performance. If an individual has the assurance that he shall never lose his job, he shall gradually lose the urge to work, innovate and learn. This behaviour is embedded in human nature. Soon, the employee shall become unproductive and lethargic. A sense of lethargy and a lack of responsibility shall be evident in the ways of working. This shall not only impact the individual’s own performance but shall also serve to demotivate his/her colleagues and peers. Productivity shall decline and organizational performance shall be adversely impacted. The truth of this hypothesis lies in the performance of almost all government organizations in India and several other countries. Prominent organizations and government enterprises such as Air India, BSNL, MTNL, DRDO, HAL and SAIL are some glaring examples. The same lackadaisical attitude towards work is evident even in public sector banks, municipal and civic bodies, various government offices and state-run transportation services.

On the contrary, private organizations and multi-national companies are extremely efficient and productive. Individuals are motivated, eager to learn and willing to work hard. The difference is evident in the high efficiency and profitability of these organizations. So what is different? There is no dearth of talent or qualified individuals in India. Why, then, do we see a drastic difference in attitude? Employees working in public sector companies are usually apathetic to their customers. They do not care to offer quality products and services to their customers and do not adhere to committed timelines and budget. They are indifferent to criticism and have no urge to improve. The reason behind this indifference is guaranteed job security. Public sector employees are aware that come what may, they shall never lose their job. This sense of security provides the excuse and opportunity to not perform their duties properly and, as a result, the entire society suffers. Corruption and inefficiency become rampant and these unfortunate but contagious traits of human nature gain root among the masses. What follows is the overall degradation of public services and social responsibility.

It is, therefore, imperative that the concept of unconditional and guaranteed job security be removed from all layers of government and public sector enterprises. This does not, however, mean that large-scale privatization and disinvestment is the only solution. It is necessary to keep key industries, organizations and services under government control for the safety and security of the nation. The probable solution, therefore, would lie in taking away unconditional and assured job security across the board from all levels of government controlled enterprises and organizations. Job security should be directly linked with performance and a continuous feedback process should be adopted to urge individuals to continuously improve their knowledge and performance. Job security should be used as a control parameter to motivate employees and improve their efficiency without violating human rights in the name of productivity.

It is time to revisit our age-old principles of job security and reassess them in the context of global competition, providing better services and sustaining economic growth.

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