Section Fivethat goes well beyond a mere defensive reaction to decline
through cost cutting.”^31
Employment Security
Employment security practices help to preserve the firm’s
investments in its human resources. They also provide the
stability needed to unleash the innovativeness of employees for
the benefit of the firm. It has been asserted that employees
who are more secure in their jobs are more likely to use their
knowledge to increase the firm’s productivity.^32 However, there
is also a downside to such practices, and an inverted
“U”-shaped relationship between job security and work effort
was noted earlier. A study cited earlier by Delery and Doty has
addressed the issue of the performance impact of job security.
Their study of banks found that employment security practices
were positively related to ROA.^33 Unfortunately, most of even
the best-managed companies had to abandon their
employment security practices in the 1980s and 1990s.
Nonetheless, for those companies that provide the right
amount of job security, there can be positive returns.
Interestingly, Southwest Airlines, one of the best-performing
companies for years, and which operates in a turbulent indus-
try, has never had a layoff.^34