Managing furloughs: how furlough policy and perceptions of fairness impact turnover intentions over time

Abstract

Given the increasing application of cutback strategies in the workplace, and an underlying need to understand explanatory process at work, we investigated the effects of one cutback strategy to deal with economic uncertainty – furloughs. Equity theory and social exchange theory guided our predictions in explaining the mechanisms through which furloughs affect turnover intentions. Quantitative data collected at two time periods during the “Great Recession”, after cutbacks were announced and implemented, provided evidence that assessments of psychological contract breach and work overload affect the relationship between furlough experience and turnover intentions. To investigate how the additional stressors of a pandemic affected the proposed model, a follow-up content analysis of employee discussions around cutback policies during the COVID-19 pandemic was conducted. This analysis provided support for the model, and also identifies several additional themes brought on by the pandemic (trust, and health and safety), with many employees exhibiting feelings of anxiety and fear around cutback policies and the status of their employment in general. Our results have implications for many organizational cutback initiatives, including salary reductions and decreased organizational resources, that are implemented during times of crisis.

Keywords:

• Furloughs
• justice
• turnover intentions
• work overload
• psychological breach

Data availability statement

The data that support the findings of this study are available from the corresponding author, Ann Huffman, upon reasonable request.

Disclosure statement

No potential conflict of interest was reported by the authors.