It’s well-established that job insecurity leads to lower productivity and disengagement at work.

But new research from Sue Ashford, professor of management and organizations at the University of Michigan Ross School of Business, shows that employees feeling job insecurity, in certain conditions, can take it even further.

Instead of just slacking off, they can do actual harm to a company—stealing supplies, fudging expense reports, bad-mouthing people, and other costly behaviors.

Moral Disengagement

Previous research has focused on the effect of job insecurity on individuals and its effect on employee motivation. Ashford and her co-authors thought there might be more to the story.

They wanted to know whether insecurity could reach a level where it leads to behavior that’s directly harmful or costly to the company.

“There are a number of things that happen at the top of an organization that cause job insecurity down the line, and people, of course, get upset,” says Ashford.

“Sometimes, under the right conditions, this can lead to moral disengagement.

“This is a process of mental rationalization that makes it OK to do something we wouldn’t normally do. It’s re-framing an action in a way so that it no longer seems immoral.”

Study Design & Results

The research looked at employees of Chinese companies over several months to gauge their level of job insecurity and subsequent behavior.

Employees from a state-owned enterprise during a time of reform—and uncertainty for workers—were surveyed, along with those from nine companies in the private sector.

It turns out that if an employee has job uncertainty coupled with two other factors—a bad relationship with his or her immediate boss and attractive alternative job prospects—he or she has a higher chance of becoming morally disengaged and behaving badly.

“That extra psychological step to justify immoral behavior happens when these things converge,” says Ashford.

“There’s job insecurity, you have a bad boss, and you see other job prospects. [Those factors] can make you feel like you’re not valued and that’s how the rationalizations start.”

Steps You Can Take

Companies can, however, take concrete steps to prevent employees from disengaging.

First, make sure managers are considerate and reach out to team members during times of distress, and that they listen to concerns and show understanding for the stress employees are feeling.

Second, while you can’t control what outside job opportunities your employees have, you can make a special effort to reach out to people who seem to have good prospects. That’s a time to make people feel valued and find ways to make it worth their while to stay.

“It’s incumbent on you to show them that the grass isn’t always greener,” says Ashford.