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recent survey by the Wyatt company observed that morale was substantially lower in companies that had downsized compared with those that had not. The WorkTrends™ survey data support this point, showing that, whether surveyed in 1985, 1990, or 1996, workers in organizations that laid off employees due to a business downturn during the previous 12 months reported less satisfaction with the present employer (49 percent answered satisfied or very satisfied to the item, "Considering everything, how would you rate your overall satisfaction with your company at the present time?") than did those in companies that had not downsized (64 percent answered satisfied or very satisfied). Describing the sharp decline in employee commitment observed over time in his polls, Daniel Yankelovich notes that "Companies are unaware of the dreadful impact they are having. They don't realize they are violating an unwritten but important social contract they have with workers" (Fortune, 1994).
According to the WorkTrends™ survey, workers in organizations that laid off employees reported less trust in senior management than did those in companies that had not downsized. In response to the question: "Senior management gives employees a clear picture of the direction the company is headed," 33 percent of respondents whose companies had layoffs agreed or strongly agreed, compared with 47 percent of respondents from companies without layoffs. Furthermore, only 26 percent indicated a belief in the truthfulness of senior management, compared with 38 percent in companies without layoffs.
Employees may also withdraw their cooperation when they perceive that social/psychological contracts have been broken. A series of studies by Sandra Robinson and her colleagues examine perceptions of psychological contracts and their breach (Robinson et al., 1994). Among recent business school graduates hired into their first job after graduation, for example, she found that they still saw their employers as having substantial obligations to them; the employees trusted that those obligations would be honored. And when those obligations were breached, the employees responded by reducing their own obligations and self-reported measures of performance and commitment (Robinson, 1996).
It is difficult, however, to find evidence that employee and company performance declined when companies broke the tradi-