{"id":5214,"date":"2025-06-02T17:55:57","date_gmt":"2025-06-02T17:55:57","guid":{"rendered":"https:\/\/aomtodayprod.wpenginepowered.com\/?p=5214"},"modified":"2025-07-09T15:48:28","modified_gmt":"2025-07-09T15:48:28","slug":"the-employee-employer-relationship-has-changed-for-the-worse","status":"publish","type":"post","link":"https:\/\/www.aom.org\/today\/the-employee-employer-relationship-has-changed-for-the-worse\/","title":{"rendered":"The Employee-Employer Relationship Has Changed for the Worse"},"content":{"rendered":"

By Nick Keppler<\/a><\/p>\n

In one recent survey,<\/a> 54 percent of hiring managers at technology companies said they expect layoffs in 2025 as more tasks are performed by AI. Although U.S. President Donald Trump\u2019s tariff plans have been delayed <\/a> and mitigated by a growing list of exemptions<\/a> and ongoing negotiations between the U.S. and targeted countries, tariff-related price uncertainty and shipment delays have created a wave of stagflation anxiety and recession fears <\/a> in the U.S., which could spur companies to slash jobs, which in turn would worsen the growing economic crisis.<\/p>\n

Academy of Management Scholar Herman Aguinis<\/a> of the George Washington University School of Business said that a few decades of mass layoffs and wages not keeping up with inflation have fundamentally changed the employee-employer relationship in the U.S. When looking to improve the bottom line, companies often eye trimming payroll because it is such a huge expense.<\/p>\n

\u201cFor many organizations, the lion’s share of the operating budget is payroll, two-thirds or more,\u201d Aguinis said. \u201cIt could be 80 percent or 85 percent.\u201d<\/p>\n

The cost-cutting approach that sees employees as expenses more than assets can be shortsighted, he said. Moreover, many companies lack an effective performance management system and, in mass layoffs, cut high-performing and low-performing employees alike.<\/p>\n

Since the 1990s, when companies, particularly in the tech sector<\/a>, regularly pruned their workforce as a cost-saving measure, despite a booming economy, much of the workforce has begrudgingly come to accept that they can lose their job in a corporate reshuffling, regardless of their job performance. Aguinis said this has damaged the psychological contract between employee and employer that engendered mutual loyalty.<\/p>\n

\u201cIn the post-World War II era, it was understood that if you do your job, you will not be fired, and you will also not leave, even if they pay you a little more somewhere else,\u201d he said. \u201cWe had this implicit loyalty in the old psychological contract.\u201d<\/p>\n

Under the new employment-at-will standard, there is no psychological contract, and most employees are always tabulating their value and waiting for the ax to fall.<\/p>\n

\u201cIf you’re not adding value to your company, they can fire you at any time,\u201d Aguinis said. \u201cOn the flip side of the coin, if you\u2019re a star performer and adding a lot of value, you get offers, and you can just go to a new employer willing to pay you more overnight, and there\u2019s no loyalty from you to the company.\u201d<\/p>\n

As economic anxiety causes people to rethink their employment, companies should do more to identify and retain their most valuable players, Aguinis said.<\/p>\n

\u201cYou have to implement a very good performance-management system so you know who your highest-performing people are, because they can leave at any time\u2014and if they leave, it will be tough to replace them,\u201d he said. \u201cFor example, in May 2025, Google announced<\/a> they are revamping the performance management and compensation system so that the total compensation pool will remain budget-neutral, but it will include larger rewards for top performers and smaller bonuses for lower-rated individuals.\u201d<\/p>\n

This awareness of the importance of adding value also cycles into the advice Aguinis gives MBA graduates. Instead of taking the job offer that pays the best, he said to look for career-development opportunities.<\/p>\n

\u201cPick the employer that gives you the most amount of learning opportunities, because that is an investment in your future, not just in the short term,\u201d Aguinis said.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Nick Keppler In one recent survey, 54 percent of hiring managers at technology companies said they expect layoffs in 2025 as more tasks are performed by AI. Although U.S. President Donald Trump\u2019s tariff plans have been delayed and mitigated by a growing list of exemptions and ongoing negotiations between the U.S. and targeted countries, […]<\/p>\n","protected":false},"author":12,"featured_media":4131,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[20,74,77,76],"tags":[],"sp_smart_badges":[],"ppma_author":[840],"class_list":["post-5214","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-careers","category-hr","category-pay","category-performance"],"acf":[],"yoast_head":"\nThe Employee-Employer Relationship Has Changed for the Worse - Academy of Management Today<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aom.org\/today\/the-employee-employer-relationship-has-changed-for-the-worse\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Nick Keppler\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/\"},\"author\":{\"name\":\"Nick Keppler\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/#\\\/schema\\\/person\\\/1b8aff6a6e3f22d0d813c97e6aab7149\"},\"headline\":\"The Employee-Employer Relationship Has Changed for the Worse\",\"datePublished\":\"2025-06-02T17:55:57+00:00\",\"dateModified\":\"2025-07-09T15:48:28+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/\"},\"wordCount\":578,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.aom.org\\\/today\\\/wp-content\\\/uploads\\\/2025\\\/04\\\/boss-yells-at-employee.jpg\",\"articleSection\":[\"CAREERS\",\"HR\",\"PAY\",\"PERFORMANCE\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/\",\"url\":\"https:\\\/\\\/www.aom.org\\\/today\\\/the-employee-employer-relationship-has-changed-for-the-worse\\\/\",\"name\":\"The Employee-Employer Relationship Has Changed for the Worse - 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