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Employee solidarity as a key to SME survival

When businesses hit difficult times, it is often employees who pay the price through redundancies or changes to conditions, which is generally seen to harm employees’ relationship with their workplace. But does the same apply for smaller businesses where there is a more personal connection between business owners and their employees?  

Researchers

Professor Alexandros Psychogios, Birmingham City Business School

Background

The recent economic downturn has pressured businesses and organisations to adapt through structural changes, redundancies and changes to pay or benefits. Often these have been seen to turn companies into hostile working places, with harder working conditions and a negative impact on ‘organisational citizenship’ – an employees’ voluntary commitment to a company or organisation. However, there has been little research on the specific effects on employees of SMEs, where conditions are different and employees may have a more personal relationship with the owners of the company.

Aims of research

Although many studies have focused on the impact of economic crises on employees in general and working conditions in particular, little is known about the relationship between extreme working situations and organisational citizenship. Given the socio-economic significance of SMEs and the impact of economic crises on many European countries, this study set out to advance knowledge in this area.

Method of research

A survey of 312 frontline workers was undertaken in 62 Greek SMEs. Responses from SMEs to the country’s economic crisis have included cutting costs to restore profitability, cutting production (and therefore staff) and searching for additional sources of liquidity (for example, by delaying payments). Increased layoffs and decreased salaries led to high uncertainty and employee dissatisfaction, which resulted in fewer people being employed by SMEs and increased levels of workload and pressure for those remaining.

Outcomes

Our study showed a direct positive relationship between extreme working conditions and organisational citizenship for individuals in the Greek SME private sector. This demonstrates that, within the context of SMEs where tighter relationships exist among employees, they draw even closer to each other during a crisis period and attempt to manage challenges through solidarity. This important finding suggests that, under such crisis conditions, SME owners/managers need to do more to encourage employee citizenship.