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Panicked about receiving a payslip? The stress can make you worse at your job.

Worrying about being made redundant, feeling powerless due to changing workplace practices and uncertainty about your role can affect your job performance and hit your morale. Yet, purposefully creating an insecure environment is a tactic used in some industries – by placing additional demands and stressors on employees – in the mistaken belief that it will increase their performance.

There are a few versions of this type of management. One is the 20-70-10 rule, popularised by former GE chairman Jack Welch, which advocates firing the most underperforming 10% of employees. Another version, known as ‘up or out’, is a strategy employed by some firms in the law and consulting industries, where low performers, those who are not improving or climbing the career promotion ladder, get replaced.

General Electric's legendary former chairman Jack Welch advocated the 20-70-10 system, also known as "rank and yank" (Credit: Getty Images)

But by keeping workers on their toes by instilling feelings of uncertainty in the workplace, employers often do more harm than good, says William Schiemann, head of Metrus Group, an organisational research firm in Somerville, in the US state of New Jersey.

When companies use job security as a stick as opposed to a carrot, it backfires

“When companies use job security as a stick as opposed to a carrot, it backfires because [workers] lose their feeling of commitment,” he says. The tactic can break down trust in the workplace, he adds.

But while the threat of job loss is never pleasant, is there an optimum level of perceived job security that will make you work your best? And, is there anything you can do as a mere cog in the corporate machine? The answers are complicated.

Deciphering job security

While many employees worry about job instability, how and why these fears occur is subjective.

Work-related anxiety depends on your profession, your role, your financial situation and even your location – for example, workers in Europe have strict protections in place around downsizing when compared to their US counterparts. In Belgium, employees who have been on the job for three years need to have three months’ notice for any terminations, a number that can be closer to two weeks in the US.

Job insecurity not only refers to the threat of being fired, but also anxieties about the future of your role

For workers, job insecurity not only refers to the threat of being fired, but also anxieties about the future of your role – a so-called qualitative job insecurity, according to Tinne Vander Elst, an organisational psychologist at KU Leuven University in Belgium.

In Belgium, for example, while just 6% of workers report fear of job loss, 31% fear negative changes to their work situation. Both can impact performance, Vander Elst found.

Stress in small doses

No doubt the prospect of job loss and career uncertainty causes stress. But in small doses, feelings of job uncertainty may give workers extra incentive to perform in the short term, says Schiemann. Some job-related uncertainty – during times of layoffs or downsizing, for example – can make people work harder to prove their worth to management, he says. “If [employees] think it’s controllable, they’ll still put in a real effort.”

Feelings of job uncertainty may give workers extra incentive to perform in the short term

For consultants, feeling unsure about securing their next project can also add to a performance boost, he says.

It's no surprise that stress can affect short-term performance – but the effects can last years, says Vander Elst (Credit: Alamy)

While there’s no scientific studies into this particular phenomenon, some research suggests that in some instances, workplace stress can help you better focus on tasks and increase efficiency.

Highly stressed people are more likely to have mental and ethical lapses

However, highly stressful work situations are never good for long-term performance, says David Creelman, a Toronto-based HR consultant. “You shouldn't put someone in this kind of situation if you can avoid it,” he says. “Highly stressed people are more likely to have mental and ethical lapses, and are harder to get along with as team members, than less stressed people.”

Long-term problems

Not only does work-related insecurity impact health and alter performance, but it also triggers physical problems that can last years after you’ve left the role, says Vander Elst. In her recent study, workers who reported having high levels of job insecurity felt depressed as much as three years later, she says. “Experiencing high levels of job insecurity [was] a tipping point for being depressed,” she says.

The idea that some level of insecurity can make workers more productive is a misconception

Even if some people perform better with a bit of uncertainty, those who feel insecure on the job are at a disadvantage, says Vander Elst. The idea that some level of insecurity can make workers more productive is a misconception, she adds.

“Job insecurity related to lower levels of in-role performance, lower levels of innovative work behaviour, higher levels of the enactment of workplace bullying behaviours and actual turnover,” she says.

For workers who want to feel more comfortable on the job, Schiemann suggests looking for managers and firms that focus on fairness and transparency, which can help you work better during times of uncertainty. No matter your industry, you’ll be more engaged if you feel your employer treats you and your colleagues equally, says Schiemann.

Ultimately, there’s not a foolproof way make sure you feel secure in your job. And if it’s affecting your performance, it’s time to take note.

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