Selles, Grietje Berdien (2025) When Layoffs Strike: Are Company Ratings Influenced by Job Status? Master thesis, Psychology.
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Abstract
Mass layoffs, often employed as cost-cutting measures during economic downturns, have become a central concern in organizational research owing to their significant impacts on employee morale, organizational commitment, and corporate reputation. The existing literature highlights the growing influence of electronic word-of-mouth on company reputations in which employees publicly share experiences. However, limited research has explored how mass layoffs specifically affect company ratings in real time and whether job status (current vs. former employees) moderates these effects. This study addresses this gap using cognitive dissonance theory, which suggests that employees cope with the psychological discomfort of mass layoffs by aligning their attitudes with their negative experiences, resulting in lower company ratings. We conducted a natural experiment by analyzing 10,931 reviews from five prominent US tech companies that conducted mass layoffs in 2023. A pre- and post-layoff comparison revealed a significant decline in company ratings post-layoffs, with the effect being more pronounced among current employees, possibly due to heightened emotional dissonance. These findings underscore the psychological toll of layoffs on employee perceptions and highlight the reputational risks associated with insufficient communication or support during such events. This study contributes to cognitive dissonance theory by illustrating how employees resolve dissonance by producing negative outcomes, thus, offering practical implications for mitigating reputational damage. By fostering transparency and providing robust support to affected employees, organizations can reduce dissonance and maintain their employer brand. The study findings provide insights for practitioners seeking to manage mass layoffs while preserving organizational trust and long-term sustainability.
| Item Type: | Thesis (Master) |
|---|---|
| Supervisor name: | Kitz, C.C. |
| Degree programme: | Psychology |
| Differentiation route: | Work, Organizational and Personnel Psychology (WOP) [Master Psychology] |
| Date Deposited: | 28 Jan 2025 15:00 |
| Last Modified: | 28 Jan 2025 15:00 |
| URI: | http://gmwpublic.studenttheses.ub.rug.nl/id/eprint/4558 |
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