Recession, HR and Change
28 Pages Posted: 2 May 2011
Date Written: April 28, 2011
We document how the recession in the wake of the financial crisis created a general surge in pro-change attitudes and behavior. Next, we examine variation across firms with respect to this change boost. In particular we focus on how and why a firm’s use of HR-measures such as training, pay changes and layoffs matters. We find that training and layoffs increases the relative size of the effect, while pay cuts reduce it. We make sense of these findings by looking at managers’ choice among HR-measures as a signal used by employees to determine their employment risk. The level of employment risk is in turn linked to employees’ investments in change in a nonlinear, U-shaped fashion.
Keywords: Change, Recession, Human Resources, Signaling
JEL Classification: M12, M51, M52, M53
Suggested Citation: Suggested Citation