Unintended Workplace Effects of Outsourcing

I have previously blogged about the loss of jobs in the U.S. due to the outsourcing practices of American companies. In the chase for additional profits, some companies ship jobs overseas to save on labor costs and health benefits. The quality of the work and supervision is a big issue and labor often complains about the loss of jobs at a time when our economy is still quite fragile.

Outsourcing can also have unintended consequences. Employee job satisfaction affects employee loyalty, efficiency in the workplace and quality of life. When employees see the jobs of fellow workers outsourced, they may begin to wonder when will it be my turn. As a result, many employees experience increased workplace stress. Greater stress can result in increased interpersonal conflict. Employees increasingly focus on their own individual situations rather than on that of their employer except as it affects them personally. Professionals are less likely to help coworkers than in the past and to work together effectively.

All these factors reduce workplace efficiency. The quality of the work product also declines as workers settle for "good enough." As a result of these business practices and their consequences, people tend to withdraw loyalty from their employers. This could have long-term effects. When the economy becomes more vigorous and grows more rapidly, companies will eventually begin to increase their hiring of scientists, engineers and technicians to work in their laboratories. With an improved laboratory job market, decreased loyalty among current staff members could result in increased current employee turnover. While employers may offer incentives to stay on the job, the memory of the previous months or years of stressful laboratory workplace conditions may result in these offers being ineffective.

A worker’s satisfaction with his or her job is important because it affects employee loyalty, efficiency in the workplace and quality of life. Martha Crowley, an assistant professor of sociology at North Carolina State University, has studied the issue and found that “If our work experience is unpleasant, it affects every aspect of our lives and ultimately it affects our ability to do our jobs.” Crowley and colleagues examined data on working conditions, workplace relationships and worker behavior of professional employees over the past 80 years. During that time, employers have increasingly implemented measures that they feel will improve worker productivity and profits, including layoffs, outsourcing jobs, replacing salaried employees with contract staff, and putting employees onto short-term teams designed to tackle individual projects. “We found that, while these measures have succeeded in increasing performance pressure, there have also been unintended consequences.”  

Many of these unintended consequences have an immediate impact on employees. For example, professional workers increasingly confront a brutal work pace that contributes to workplace stress. Because projects and co-workers change fairly often, professional employees feel a greater sense of chaos at work.  Other consequences include an increase in fear among employees that their job will disappear and a distrust of management.

The researchers also found a number of significant ramifications for employers. For example, they found that professionals are less likely to help co-workers than in the past, because they are primarily interested in protecting their own jobs.  Co-worker conflict hurts the efficiency and quality of the work product since employees are less likely to work together effectively in such a stressful environment.

Outsourcing threatens worker harmony of American business. Managers should realize that it is part of their corporate social responsibility to provide jobs for U.S. workers especially in these tough times. The salaries of top executives are way out of line with the rest of the world so executives should be willing to take less compensation to keep jobs in the U.S. and create a workplace environment that promotes goal congruence and the long-term success of American business.

Blog posted by Steven Mintz, aka Ethics Sage, on September 19, 2011