Threatening to fire workers doesn’t make them more productive

It’s harder to do your job when all you can think of is having to find another one.
It’s harder to do your job when all you can think of is having to find another one.
Image: Reuters/Gary Cameron
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One of the biggest ways companies motivate people is the threat of losing their jobs. Some do it explicitly through forced ranking and threats of layoffs. Others create insecurity when managers give infrequent feedback or incomplete information.

But actively encouraging workers to fear for their job doesn’t make them more competitive and productive; it makes them panicked and incautious. Job insecurity hurts health, makes people burn out, and reduces job satisfaction and performance, according to a piece rounding up recent research at the New York Times (paywall).

Studies find that workers who fear being laid off are less safety-conscious, more likely to get injured, and less likely to report injuries. A forthcoming study from researchers at Texas A&M University found that even at a company with relatively few layoffs and a supportive work culture, insecure employees were less likely to seek out support or ask for flex-time or time off.

There’s obvious good reason to be nervous. In many cases, finding a new job after losing one takes months, and gets more and more difficult. A recent Gallup poll finds that almost a third of US workers fear that they’ll be laid off, and even more fear wage and benefit cuts.

Forced or “stack” ranking, where managers rank their employees on a bell curve and censure or fire the worst performers, is frequently criticized for creating excessively competitive cultures and internal politicking. The practice (or variations on it) is less popular than it used to be, but is still fairly common at large American corporations. Even if there aren’t strict quotas or mandatory cuts, many companies still use ranking systems.

But the recent research underlines the other flaw with forced ranking: its basic assumption that pressure will boost productivity. Making people insecure may make them work harder to try and be on the right side of the bell curve, but that will come at the cost of health, happiness, and future performance. Unless companies are confident that they can constantly replace the people that burn out with new employees that are just as good, it looks like a losing formula.