Why Do Employees’ Perceptions of their Organization's Change History Matter? The Role of Change Appraisals

• Author: Alannah E. Rafferty,Simon L. D. Restubog
• Published date: 01 May 2017
• DOI: http://doi.org/10.1002/hrm.21782
• Date: 01 May 2017

Human Resource Management, May–June 2017, Vol. 56, No. 3. Pp. 533–550

© 2016 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21782

Correspondence to: Alannah E. Rafferty, School of Management, UNSW Business School, University

of New South Wales, Kensington, Sydney, Australia 2052, Phone: +61 2 9385 9710, Fax: +61 2 9662 8531,

E-mail: a.rafferty@unsw.edu.au.

WHY DO EMPLOYEES’ PERCEPTIONS

OF THEIR ORGANIZATION’S

CHANGE HISTORY MATTER?

THEROLE OF CHANGE APPRAISALS

ALANNAH E. RAFFERTY AND SIMON L. D. RESTUBOG

In this article, we identify employees’ change history in an organization as a key

antecedent of their appraisals about organizational change (i.e., threat, harm,

and challenge). We argue that these change appraisals are associated with

psychological contract violation, which in turn is associated with intentions to

leave the organization, and, ultimately, with voluntary employee turnover. In

2009, we collected data over three measurement periods from 252 full-time, per-

manent employees from a manufacturing organization in the Philippines that

was just about to undergo an organizational-wide restructuring. At Time 1 (T1, the

change announcement), employees completed a survey assessing their change

history in the organization and change appraisals. At Time 2 (T2, six months after

the announcement), employees completed a survey assessing psychological

contract violation and turnover intentions. Two years later (Time 3, T3), we col-

lected data on voluntary employee turnover. Results suggest that a poor change

history in an organization was negatively associated with challenge appraisals

and was positively associated with threat and harm appraisals. Challenge and

harm appraisals were signifi cantly associated with psychological contract vio-

lation. These appraisals, in turn, were associated with turnover intentions and,

ultimately, with voluntary employee turnover. In addition, T1 threat appraisals

were directly positively associated with T3 voluntary turnover. Theoretical and

practical implications are discussed. © 2016 Wiley Periodicals,Inc.

Keywords: change appraisals, psychological contract violation, subjective per-

ceptions of change management history, voluntary employee turnover

Large-scale organizational changes occur

with increasing regularity (Bughin, Hung

Byers, & Chui, 2011; De Meuse, Marks, &

Dai, 2010), and yet, often, changes do not

achieve their intended aims. Indeed, up

to 70% of all change efforts fail (Beer & Nohria,

2000). In response to the high rate of change fail-

ure, researchers have devoted considerable effort

to understand the factors that may increase the

likelihood of change implementation success.

To date, three major categories of factors that

influence organizational change outcomes have

534 HUMAN RESOURCE MANAGEMENT, MAY–JUNE 2017

Human Resource Management DOI: 10.1002/hrm

We identify

employees’ cognitive

appraisals about

change (e.g., threat,

harm, and challenge)

and psychological

contract violation

as the underlying

psychological

mechanisms that

link employees’

perceptions of their

change history and

organizational exit.

people respond positively or negatively to aspects

of the change context.

Second, prior studies in organizational change

have predominantly focused on threat or harm

appraisals and have ignored challenge apprais-

als. However, it is likely that organizational

change events will be differentially experienced

by change recipients (Rafferty & Griffin, 2006).

While some aspects of a change may be perceived

as resulting in a potential loss or as presenting a

danger to one’s well-being with negative implica-

tions for the future (Lazarus & Folkman, 1984),

other employees may perceive change as enhanc-

ing opportunities for growth and development. As

such, it is important to represent employees’ com-

plete experience of change by incorporating both

threat and harm appraisals and challenge apprais-

als in studies of organizational change events.

Third, we also contribute to the HRM litera-

ture in terms of highlighting the importance of

the internal change context when managing orga-

nizational change efforts. A “healthy” organiza-

tional change is characterized by developing an

awareness of local norms and an understanding

and appreciation for the diversity of employees’

reactions to change (Saksvik et al., 2007; Tvedt,

Saksvik, & Nytrø, 2009). We suggest that a critical

aspect of building awareness of local norms and

responses to change involves considering employ-

ees’ subjective perceptions of their organization’s

change history.

Finally, the vast majority of cognitive appraisal

research has been conducted in the laboratory

with students (Fugate, Harrison, & Kinicki, 2011),

which is important when establishing cause-and-

effect relationships. However, this methodology

has concomitant weaknesses in terms of general-

izing results. We extend research by examining

the relationships between employees’ perceptions

of their change history and cognitive appraisals in

a complex organizational change process involv-

ing a large-scale restructuring. In this article, we

further explicate the research model, develop

hypotheses, and discuss our key findings and their

implications for theory and practice.

Theory and Hypotheses

The transactional theory of stress (Lazarus &

Folkman, 1984) proposes that cognitive appraisal

is a central element in the process of classifying an

encounter with respect to its significance for one’s

health and well-being. Specifically, the cognitive

appraisal process results in two sets of apprais-

als: primary and secondary appraisals. Primary

appraisal is concerned with answering the ques-

tion, “Am I likely to be benefitted or harmed now

or in the future, by an event or situation?” There

been identified: change processes, the content

of change, and the change context (Armenakis

& Bedeian, 1999; Self, Armenakis, & Schraeder,

2007). While all three sets of factors influence

organizational change outcomes (Armenakis &

Bedeian, 1999; Rafferty & Restubog, 2010), the

role of the change context has been ignored

(Herold, Fedor, & Caldwell, 2007). The lack of

attention directed toward understanding the

role of the internal change context on employee

responses to change represents a lost opportunity

for change agents and human resource managers

who are in a unique position to use this knowl-

edge to influence this context (Brown, Kulik,

Cregan, & Metz, in press; Schumacher, Schreurs,

Van Emmerik, & De Witte, in press).

Guided by Lazarus and

Folkman’s (1984) transactional

model of stress, we examine the

influence of employees’ subjective

perceptions of their change history

within their current organization

(an important aspect of the inter-

nal change context) on employees’

cognitive appraisals about change.

These variables are proposed to

influence psychological contract

violation, and, ultimately, volun-

tary employee turnover. In sum,

we identify employees’ cogni-

tive appraisals about change (e.g.,

threat, harm, and challenge) and

psychological contract violation as

the underlying psychological mech-

anisms that link employees’ percep-

tions of their change history and

organizational exit.

Our article makes four impor-

tant contributions to the organiza-

tional change and human resource

management (HRM) literature.

First, we expand our theoretical understanding

of employees’ perceptions of their change man-

agement history (Bordia, Restubog, Jimmieson,

& Irmer, 2011; Rafferty & Restubog, 2010), which

has received relatively little attention. We focus

on the role of cognitive appraisals of change as

critical mediators between the change context

and subsequent reactions to change. Cognitive

appraisal involves an evaluation of “what one’s

relationship to the environment implies for one’s

well-being” (Smith & Lazarus, 1993, p. 234).

Fugate (2012, p. 182) argued that “appraisals give

meaning to employees’ experience of change.”

As such, an analysis of the relationships between

cognitive appraisals during change and reactions

to change enables us to better understand why