Moderating Effect of Employability on the Relationship Between Job

Insecurity and Motivation

Aditya Nugroho

, Windijarto

and Dewi Retno Suminar

Postgraduate, Universitas Airlangga, Surabaya, Indonesia

Department of Management, Universitas Airlangga, Surabaya, Indonesia

Faculty of Psychology, Universitas Airlangga, Surabaya, Indonesia

Keywords: Job Insecurity, Motivation, Employability

Abstract: Work motivation is the process of stimulating people in action to accomplish the goals in their careers.

Employees with good motivation can help the company to achieve the main goal, and vice versa. This study

aims to investigate and analyse the influence of job insecurity on motivation with employability as a

moderating variable. This study uses a quantitative approach by distributing questionnaires to collect data.

Hypotheses are tested with a sample of 73 employees of a newly acquired company in Surabaya which

experienced a decrease in productivity at the time of the acquisition process compared to the previous year.

Multiple linear regression results suggest that job insecurity negatively affects employee motivation.

Furthermore, employability moderates the influence of job insecurity on employee motivation.

Employability gives individual control in a broader sense, such as control to be able to change the jobs when

needed.

1 INTRODUCTION

A company or organization needs good quality

human resources to achieve its goals. Well-managed

human resources will determine the success of the

organization. If it is not managed properly then the

desired productivity cannot be achieved (Punarya,

2016). One of the most important factors to improve

employee productivity in order to achieve company

goals is work motivation (Hariandja, 2002).

Robbins (2001) stated that motivation is the

process of calculating the intensity, direction, and

persistence of a person in achieving goals. Employee

work motivation can help the company reach its

goals. Employees with good motivation are

considered to have initiated the process of enhancing

organizational behavior, encouraging ongoing

activities within the organization and directing the

activity towards a specific target (Madsen, 1968 in

Yurtseven & Halici, 2012).

Mergers and acquisitions have a significant

effect on employee motivation (Locke & Latham,

2004). M&As necessarily involve organizational

change, integrating some or all parts of the original

organizations’ functions and activities (Gu Seo &

Hill, 2005). The M&A affects work productivity

because of various factors such as anxiety, fear, and

uneasiness (Whittle, 2002). According to

Teerikangas (2010), the acquisition causes anxiety

which is related to job security. The needs of

security must be fulfilled by a person. If these needs

are not fulfilled then employees will feel the

insecurity for the continuity of their work. This

situation is usually called job insecurity. It is defined

as the perceived threat of job loss and the worries

related to that threat (De Witte, 2005).

One of the important factors that is expected to

improve the employees’ ability to overcome the

uncertainty in relation to company change is

employability. Rothwell and Arnold (2007) argued

that employability is the ability to retain, own or get

their desired job. Sverke, Hellgren and Naswall

(2002), had argued that employability is a factor

which can be weakened by the negative impact of

job insecurity on its outcomes, such as motivation.

Individuals with high employability reported having

better life satisfaction than individuals with low

employability which resulted in high job insecurity

(Kalyal et al., 2010).

Established in 2007, the company has a function

as a distributor which is responsible for product

sales, promotion and distribution. In early 2017, the

Nugroho, A., Windijarto, . and Suminar, D.

Moderating Effect of Employability on the Relationship Between Job Insecurity and Motivation.

DOI: 10.5220/0007536600050009

In Proceedings of the 2nd International Conference Postgraduate School (ICPS 2018), pages 5-9

ISBN: 978-989-758-348-3

shares of the company were acquired 100% by a

foreign company. The transactions for acquisitions

were targeted to be finished on the fourth quarter of

the financial year of 2017. In the same year, the

company experienced a decrease in productivity

compared to the previous year. This decline is

considered very significant because almost every

month in 2017, the sales could not match the sales in

2016. This decline occurred at the time of the

acquisition process in early until the end of 2017.

Most likely, employee motivation was disrupted due

to the acquisition process which resulted in the

decline in employee productivity.

This paper takes a step towards increasing

knowledge about the influence of job insecurity on

motivation and the moderating role of employability.

The paper has two purposes: (1) to investigate and

analyze the influence of job insecurity on

motivation, (2) to determine whether employability

can moderate the negative effects of job insecurity

on motivation.

1.1 The Relationship Between Job

Insecurity and Motivation

Job security is one of the most important factors in

maintaining employee motivation when there is a

change in the organization. Employees believing that

they will not lose their jobs or they will be employed

in the same organization as long as they want is a

significant reason for motivation (Senol, 2011).

Therefore, job security is one of the most significant

employee satisfaction variables which express

employee attitudes towards their job (Bakan &

Buyukbese, 2004 in Senol, 2011).

Storseth (2007 in Adewale 2015) stated that the

higher the job insecurity perceived by a person, the

lower work motivation. Job insecurity also causes a

decrease in job satisfaction resulting in the

emergence of various forms of organizational

rebellion behavior.

Job insecurity occurs due to major changes in

organizations such as mergers and acquisitions,

downsizing, reorganization, new technology, and

physical changes (Greenhalgh & Rosenblatt, 1984).

Job insecurity can cause some negative impacts such

as decreased productivity, turnover, adaptability

(Greenhalgh & Rosenblatt, 1984), employee focus,

innovation, and work motivation (Brocker, Tyler,

and Schneider, 1992; De Witte & Naswall, 2003;

Adewale, 2015). Job insecurity can negatively affect

motivation. If employees are suffering from low

levels of motivation, the productivity is significantly

impacted, therefore lowering the success of the

organization and preventing further growth

(Herzberg et al., 2011 in Wetherall & Lippell, 2016).

Based on this reason we made the following

prediction:

Hypothesis 1: Job insecurity significantly

influences motivation.

1.2 Employability as Moderator

Rothwell & Arnold (2007) argue that employability

is the ability to retain, own or get the desired job.

Employability is the capacity or ability to remain

attractive in the labor market by anticipating and

reacting to the changes in the work environment

(Sanders & De Grip, 2004 in Berntson, 2008). This

ability is expected to minimize the negative impacts

of job insecurity toward employees. The research

conducted by Silla et al. (2008) found that

employability moderates the relationship between

job insecurity and subjective well-being. This study

revealed that employees who have lower

employability will experience a higher job insecurity

than their colleagues who have high employability.

Employability gives an individual control in a

broader sense, such as the control to be able to

change jobs if necessary (Baruch, 2001; Kanter,

1993 in Berntson, Naswall & Sverke, 2010). Self-

control has been defined as an individual’s beliefs or

motivation that becomes the energy to encourage

and lead the individual to reach the goal (Machrany,

1989; Stanton, 1991). Based on this reason we made

the following prediction:

Hypothesis 2: Employability moderates the

influence of job insecurity on motivation.

2 CONCEPTUAL FRAMEWORK

Job insecurity can be caused by merger and

reduction, acquisition, downsizing, reorganization,

and new physical technology (Greenhalgh &

Rosenblatt, 1984). Job insecurity can negatively

ICPS 2018 - 2nd International Conference Postgraduate School

affect motivation; if employees experience a low

level of motivation, productivity is significantly

affected which will have an impact on reducing

organizational success and preventing organizational

growth (Herzberg et al., 2011 in Wetherall &

Lippell, 2016). Employability as a moderator

variable is assumed to have a role in strengthening

or weakening the influence of job insecurity on

motivation.

3 METHOD

3.1 Data Collection and Respondents

For this study, data were collected from a newly

acquired company in Surabaya. This company had

decreased productivity by 20% in 2017 or only

reached 80% of productivity in 2016. The

acquisition of this company in 2017 could have

disrupted employee motivation which resulted in the

decline of employee productivity.

Data were collected by using a survey

questionnaire. This study refers to Kerjcie and

Morgan’s formulation in order to determine the

sample size. According to Krjecie and Morgan’s

formulation with (P=0.5), (d=5%), confidence level

of 95% and (N=90) then the sample size (n) for this

study is 73.

3.2 Measures

All variables were measured on Likert response

scales ranging from 1 (strongly disagree) to 5

(strongly agree). Job insecurity was assessed using

De Witte’s (2000) Job Insecurity Questionnaire

(JIQ). It measures employee perceptions of job

insecurity that summarizes the cognitive dimension

(e.g. ‘I think I’ll be able to continue working here’)

and affective dimension (e.g. ‘I’m afraid I’ll lose my

job’). This scale consists of 11 items with the

reliability (Cronbach’s α = .90).

Motivation in this study was measured by using

11 indicators of motivation theory developed by

Herzberg. This scale summarizes two dimensions of

motivation, intrinsic and extrinsic motivation. The

intrinsic motivation dimension consists of 5

indicators and the intrinsic consists of 6 indicators.

The Cronbach’s alpha of this scale is quite good (α =

.77).

The Rothwell and Arnold (2007) employability

scale was used to measure individuals’

employability. This scale consists of two dimensions

of employability, internal (e.g. ‘Even if there was

downsizing in this organization I am confident that I

would be retained’) and external (e.g. ‘I could easily

get a similar job to mine in almost any

organization’). This scale consists of 16 items with

Cronbach’s alpha (α = .81)

3.3 Technique of Data Analysis

This research uses a quantitative approach. The

technique of data analysis is divided into three steps.

The first is Testing of Assumptions including

Normality test, Multicolinearity test, and

Heteroscedasticity test. The second step is

Hierarchical Regression Analysis which is a way to

determine the effect of an independent variable on a

dependent variable. The third step is Hypothesis

Testing including F test, t-test, and Coefficient of

Determination.

4 RESULTS

Hypotheses were tested by using multiple regression

analysis for each outcome variable.

Table 1 : Summary of Multiple Regression Analyses

Model

Square

Change

Sig.

0.217

0.047

0.034

0.065

0.400

0.160

0.136

0.002

0.418

0.175

0.139

0.004

Model 1: Job Insecurity

Model 2: Job Insecurity and Employability

Model 3: Job Insecurity, Employability and Interaction XZ

Based on Table I, the first model has the

correlation coefficient (R) value of 0.217 and the

coefficient of determination (R Square) value of

0.047 with Sig. = 0.065. If the assumption is Sig.

< 0.10 then it can be concluded that the first

model, that is job insecurity, has a significant

effect on motivation. So, Hypothesis 1 is

supported by this finding.

The second model shows the strength of the

relationship between job insecurity and

employability as a moderating variable on

employee motivation without interaction test or

multiplication of independent variables. It

resulted in R value of 0.400 and R Square value

of 0.160 with Sig. of 0.002. It can be concluded

Moderating Effect of Employability on the Relationship Between Job Insecurity and Motivation

that job insecurity and employability

significantly affect motivation variable with Sig.

0.002 < 0.05. This model yields an R Square

value of 0.160 which means that job insecurity

and employability have 16% effect on

motivation. Then, Hypothesis 2 is supported by

this finding.

The result of hierarchical regression analysis

in Model 3 shows that job insecurity and

employability has a Sig. value of 0.004. This

model uses an Interaction test between job

insecurity and employability. Referring to the

asumption if Sig. <0.05 then it can be concluded

that job insecurity and employability as a

moderating variable have an effect on

motivation. This model yields an R Square value

of 0.175. It shows that job insecurity,

employability, and its interaction simultaneously

affect employee motivation.

5 DISCUSSION

Job insecurity arises when an individual perceives a

greater threat than opportunity, lack of control and

changes in job characteristics (Chovwen & Invesor,

2009). Based on the results of data analysis, it can be

seen that job insecurity affects employee motivation.

This findings supports earlier studies which suggest

that job insecurity has a negative relationship

between job insecurity and motivation (Bonita &

Nurtjahjanti, 2016). This relationship shows that the

higher the job insecurity perceived by employees,

the lower their motivation and vice versa. The

direction of this relationship is supported by De

Witte’s (2005) statement that employees who feel

job insecurity have a lower level of satisfaction and

work motivation than those employees who do not

perceive job insecurity.

This study also found factors that caused the

influence of job insecurity on employee motivation

with the presence of two aspects of job insecurity.

The first aspect is cognitive job insecurity which is

defined as a threat perceived by employees to the

continuity of their job features (e.g. deterioration of

working conditions) (Shoss, 2017 in Jiang, 2018). It

can be seen by the low level of productivity in 2017

compared to 2016. It means that there was

something impairing the the working conditions at

the time of the acquisition process. The second

aspect is affective job insecurity which is defined as

an emotional reaction to the perceived threat to an

employee’s job (e.g. anxiety, fear, worry) (Jiang,

2018). It can be seen in this research that 85% of

employees expressed their anxiety about losing their

jobs in the future.

The other result of this study is that

employability moderates the influence of job

insecurity on motivation. Based on the data analysis,

employability can simultaneously reduce the

negative effects on job insecurity with Sig. value of

0.002 and R Square value of 0.160 whereas

previously Sig. value was only 0.065 and R Square

value 0.047. This finding supports earlier study

conducted by Sverke, Hellgren, and Naswall (2002)

who argued that employability is a factor that can be

weakened by the relationship of job insecurity with

its outcomes, e.g. motivation. Employability is also

one of the important factors expected to improve

employees’ ability to overcome the uncertainty in

association with the changes in a company or

organization. Silla et al. (2008) argued that

employability can be useful in the same way as job

insecurity. Employability also can reduce the

possible consequences of an unfavorable job for

employee well-being.

Employability is influenced by situational

factors such as the internal labour market. In an

internal labour market, job security is an

important factor (Jago & Deery, 2004 in Fisher

& McPhail, 2011). Job security can be linked to

HRM strategy that encourages an extended

length of service from employees. This strategy

is used to make employees become part of a

family that appreciates them gradually for each

year of service, letting them stay in the company,

enhancing the familial ties and associated

obligations (Fisher & McPhail, 2011).

In the organization, managers and leaders

need to learn to understand and effectively

motivate their employees. Amabile (1993) states

that employees are the pillar of a successful

organization. Motivation can be given either

through rewards or opportunities in order to

develop employees’ potential. Unmotivated

employees tend to work with no effort, avoid the

workplace as much as possible, and leave the

organization or company. On the other hand,

motivated employees tend to be persistent,

creative, productive, and produce high quality

jobs as they wish (Ganta, 2014).

6 CONCLUSION

This study found that job insecurity has an effect on

motivation with a negative relationship direction.

This study also found the moderating effect of

ICPS 2018 - 2nd International Conference Postgraduate School

employability which can reduce the negative effect

of job insecurity on motivation. Furthermore, this

study surveyed all levels of employees which was

mostly low level employees. Managers need to

create a better situation in the company in order to

keep the employees feeling comfortable. Training

and Development can be a good way to improve

employability since it increases the skills of

employees.

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Moderating Effect of Employability on the Relationship Between Job Insecurity and Motivation